Question

Collini Corporation has two production departments, Machining and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining Department’s predetermined overhead rate is based on machine-hours and the Customizing Department’s predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: Machining Customizing Machine-hours 17,000 15,000 Direct labor-hours 3,000 6,000 Total fixed manufacturing overhead cost $102,000 $61,200 Variable manufacturing overhead per machine-hour $ 1.70 Variable manufacturing overhead per direct labor-hour $ 4.10 During the current month the company started and finished Job T268. The following data were recorded for this job: Job T268: Machining Customizing Machine-hours 80 30 Direct labor-hours 30 50 Direct materials $720 $ 380 Direct labor cost $900 $1,500 The total job cost for Job T268 is closest to:

Answer 1

Answer:

Total cost= $4,791

Explanation:

Giving the following information:

Machining Customizing

Machine-hours 17,000 15,000

Direct labor-hours 3,000 6,000

Total fixed manufacturing overhead cost $102,000 $61,200

Variable manufacturing overhead per machine-hour $ 1.70

Variable manufacturing overhead per direct labor-hour $ 4.10

Job T268:

Machining:

80 Machine-hours

$720 Direct materials

$900 Direct labor cost

Customizing:

50 Direct labor-hours

$380  Direct materials

$1,500 Direct labor cost

First, we need to calculate the predetermined overhead rate for each department:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Machinning= (102,000/17,000) + 1.7= $7.2 per machine-hour

Customizing= (61,200/6,000) + 4.1= $14.3 per direct labor hour

Now, we can calculate the total cost of Job T268:

Total cost:

Machinning= 720 + 900 + 80*7.2= $2,196

Customizing= 380 + 1,500 + 14.3*50= $2,595

Total cost= $4,791