Ch2, Job-Order Costing Calculating Unit Product Costs Part 18

[QUESTION] 272. Kluth Corporation has two manufacturing departments--Molding and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Estimated total machine-hours (MHs)................................. Estimated total fixed manufacturing overhead cost............. Estimated variable manufacturing overhead cost per MH. . . Molding 3,000 $15,900 $1.20 Customizing Total 2,000 5,000 $4,200 $20,100 $2.40 During the most recent month, the company started and completed two jobs--Job C and Job M. There were no beginning inventories. Data concerning those two jobs follow: Direct materials........................ Direct labor cost....................... Molding machine-hours............ Customizing machine-hours..... Job C Job M $15,600 $8,600 $25,100 $8,300 2,000 1,000 800 1,200 Required: Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 20% on manufacturing cost to establish selling prices. Calculate the selling prices for Job C and for Job M. Answer: Molding Department predetermined overhead rate: Estimated fixed manufacturing overhead.......................................................... $15,900 Estimated variable manufacturing overhead ($1.20 per MH × 3,000 MHs)...... 3,600 Estimated total manufacturing overhead cost (a).............................................. $19,500 Estimated total machine-hours (b).................................................................... 3,000 MHs Departmental predetermined overhead rate (a) ÷ (b)....................................... $6.50 per MH Customizing Department predetermined overhead rate: Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($2.40 per MH × 2,000 MHs)...... Estimated total manufacturing overhead cost (a).............................................. Estimated total machine-hours (b).................................................................... Departmental predetermined overhead rate (a) ÷ (b)...................................... Manufacturing overhead applied to Job C: Molding ($6.50 per MH × 2,000 MHs).................. Customizing ($4.50 per MH × 800 MHs).............. Total manufacturing overhead applied................. $13,000 3,600 $16,600 Manufacturing overhead applied to Job M: Molding ($6.50 per MH × 1,000 MHs).................. Customizing ($4.50 per MH × 1,200 MHs)........... Total manufacturing overhead applied................. $6,500 5,400 $11,900 The selling price for Job C would be calculated as follows: Direct materials....................................... $15,600 Direct labor cost...................................... 25,100 Manufacturing overhead applied............. 16,600 Total manufacturing cost......................... $57,300 Markup (20%).......................................... 11,460 Selling price............................................. $68,760 $4,200 4,800 $9,000 2,000 MHs $4.50 per MH The selling price for Job M would be calculated as follows: Direct materials....................................... $8,600 Direct labor cost...................................... 8,300 Manufacturing overhead applied............. 11,900 Total manufacturing cost......................... $28,800 Markup (20%).......................................... 5,760 Selling price............................................. $34,560 Difficulty: 2 Medium Learning Objective: 02-01 Learning Objective: 02-02 Learning Objective: 02-03 Learning Objective: 02-04 Topic Area: Blooms: Evaluate AACSB: Analytical Thinking AICPA: BB Reflective Thinking AICPA: FN Measurement [QUESTION] 273. Amason Corporation has two production departments, Forming and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department’s predetermined overhead rate is based on machine-hours and the Assembly 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: Machine-hours.................................................................. Direct labor-hours.............................................................. Total fixed manufacturing overhead cost........................... Variable manufacturing overhead per machine-hour......... Variable manufacturing overhead per direct labor-hour..... Forming 16,000 2,000 $102,400 $1.90 Assembly 11,000 6,000 $66,000 $3.80 During the current month the company started and finished Job A950. The following data were recorded for this job: Job A950: Machine-hours............. Direct labor-hours......... Direct materials............ Direct labor cost........... Forming 50 20 $665 $520 Assembly 20 40 $415 $1,040 Required: Calculate the selling price for Job A950 if the company marks up its unit product costs by 30% to determine selling prices. Answer: Forming Department: Forming Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department) = $102,400 + ($1.90 per machine-hour × 16,000 machine-hours) = $102,400 +$30,400 = $132,800 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $132,800 ÷ 16,000 machine-hours = $8.30 per machine-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $8.30 per machine-hour × 50 machine-hours = $415 Assembly Department: Assembly Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct laborhour × Total direct labor-hours in the department) = $66,000 + ($3.80 per direct labor-hour × 6,000 direct labor-hours) = $66,000 + $22,800 = $88,800 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $88,800 ÷6,000 direct labor-hours = $14.80 per direct labor-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $14.80 per direct labor-hour × 40 direct labor-hours = $592 Overhead applied to Job A950 Forming Department........................ Assembly Department..................... Total................................................. $415 592 $1,007 Direct materials.............................. Direct labor.................................... Manufacturing overhead applied.... Total cost of Job A950.................... Total cost of Job A950........ Markup ($3,647.00 × 30%). Selling price........................ Difficulty: 1 Easy Learning Objective: 02-01 Learning Objective: 02-02 Learning Objective: 02-03 Learning Objective: 02-04 Topic Area: Blooms: Evaluate AACSB: Analytical Thinking AICPA: BB Reflective Thinking AICPA: FN Measurement Forming $665 $520 $415 Assembly $415 $1,040 $592 Total $1,080 1,560 1,007 $3,647 $3,647.00 1,094.10 $4,741.10 [QUESTION] 274. Dancel Corporation has two production departments, Milling and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Milling Department’s predetermined overhead rate is based on machine-hours and the Finishing 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: Machine-hours.................................................................. Direct labor-hours.............................................................. Total fixed manufacturing overhead cost........................... Variable manufacturing overhead per machine-hour......... Variable manufacturing overhead per direct labor-hour..... Milling 17,000 1,000 $91,800 $2.00 Finishing 14,000 6,000 $64,200 $3.40 During the current month the company started and finished Job M565. The following data were recorded for this job: Job M565: Machine-hours............. Direct labor-hours......... Direct materials............ Direct labor cost........... Milling 70 10 $750 $340 Finishing 20 40 $360 $1,360 Required: a. Calculate the total amount of overhead applied to Job M565 in both departments. b. Calculate the total job cost for Job M565. c. Calculate the selling price for Job M565 if the company marks up its unit product costs by 20% to determine selling prices. Answer: a. Milling Department: Milling Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department) = $91,800 + ($2.00 per machine-hour × 17,000 machine-hours) = $91,800 +$34,000 = $125,800 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $125,800 ÷ 17,000 machine-hours = $7.40 per machine-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $7.40 per machine-hour × 70 machine-hours = $518 Finishing Department: Finishing Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department) = $64,200 + ($3.40 per direct labor-hour × 6,000 direct labor-hours) = $64,200 + $20,400 = $84,600 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $84,600 ÷6,000 direct labor-hours = $14.10 per direct labor-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $14.10 per direct labor-hour × 40 direct labor-hours = $564 Overhead applied to Job M565 Milling Department........................... Finishing Department...................... Total................................................. $518 564 $1,082 b. Direct materials.............................. Direct labor.................................... Manufacturing overhead applied.... Total cost of Job M565................... c. Total cost of Job M565........ Markup ($3,892.00 × 20%). Selling price........................ Difficulty: 1 Easy Learning Objective: 02-01 Learning Objective: 02-02 Learning Objective: 02-03 Learning Objective: 02-04 Topic Area: Blooms: Evaluate AACSB: Analytical Thinking AICPA: BB Reflective Thinking AICPA: FN Measurement Milling $750 $340 $518 Finishing $360 $1,360 $564 Total $1,110 1,700 1,082 $3,892 $3,892.00 778.40 $4,670.40 [QUESTION] 275. Pangle Corporation has two production departments, Forming and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming 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: Machine-hours.................................................................. Direct labor-hours.............................................................. Total fixed manufacturing overhead cost........................... Variable manufacturing overhead per machine-hour......... Variable manufacturing overhead per direct labor-hour..... Forming 16,000 4,000 $91,200 $2.10 Customizing 12,000 9,000 $99,000 $3.10 During the current month the company started and finished Job M109. The following data were recorded for this job: Job M109: Machine-hours............. Direct labor-hours......... Direct materials............ Direct labor cost........... Forming 50 20 $915 $620 Customizing 30 50 $355 $1,550 Required: Calculate the total job cost for Job M109. Answer: Forming Department: Forming Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department) = $91,200 + ($2.10 per machine-hour × 16,000 machine-hours) = $91,200 +$33,600 = $124,800 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $124,800 ÷ 16,000 machine-hours = $7.80 per machine-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $7.80 per machine-hour × 50 machine-hours = $390 Customizing Department: Customizing Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct laborhour × Total direct labor-hours in the department) = $99,000 + ($3.10 per direct labor-hour × 9,000 direct labor-hours) = $99,000 + $27,900 = $126,900 Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $126,900 ÷9,000 direct labor-hours = $14.10 per direct labor-hour Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $14.10 per direct labor-hour × 50 direct labor-hours = $705 Overhead applied to Job M109 Forming Department........................ Customizing Department................. Total................................................. Direct materials.............................. Direct labor.................................... Manufacturing overhead applied.... Total cost of Job M109................... Difficulty: 1 Easy Learning Objective: 02-01 Learning Objective: 02-02 Learning Objective: 02-03 Learning Objective: 02-04 $390 705 $1,095 Forming $915 $620 $390 Customizing $355 $1,550 $705 Total $1,270 2,170 1,095 $4,535 Topic Area: Blooms: Evaluate AACSB: Analytical Thinking AICPA: BB Reflective Thinking AICPA: FN Measurement [QUESTION] 276. Vasilopoulos Corporation has two production departments, Casting and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department’s predetermined overhead rate is based on machine-hours and the Assembly 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: Machine-hours.................................................................. Direct labor-hours.............................................................. Total fixed manufacturing overhead cost........................... Variable manufacturing overhead per machine-hour......... Variable manufacturing overhead per direct labor-hour..... Casting 17,000 3,000 $119,000 $2.10 Assembly 11,000 6,000 $51,000 $3.10 During the current month the company started and finished Job A182. The following data were recorded for this job: Job A182: Machine-hours............. Direct labor-hours......... Direct materials............ Direct labor cost........... Casting 50 10 $895 $240 Assembly 20 50 $365 $1,200 Required: a. Calculate the estimated total manufacturing overhead for the Casting Department. b. Calculate the estimated total manufacturing overhead for the Assembly Department. c. Calculate the predetermined overhead rate for the Casting Department. d. Calculate the predetermined overhead rate for the Assembly Department. e. Calculate the total amount of overhead applied to Job A182 in both departments. f. Calculate the total job cost for Job A182. g. Calculate the selling price for Job A182 if the company marks up its unit product costs by 20% to determine selling prices. Answer: a. Casting Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department) = $119,000 + ($2.10 per machine-hour × 17,000 machine-hours) = $119,000 +$35,700 = $154,700 b. Assembly Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct laborhour × Total direct labor-hours in the department) = $51,000 + ($3.10 per direct labor-hour × 6,000 direct labor-hours) = $51,000 + $18,600 = $69,600 c. Casting Department: Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $154,700 ÷ 17,000 machine-hours = $9.10 per machine-hour d. Assembly Department: Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $69,600 ÷6,000 direct labor-hours = $11.60 per direct labor-hour e. Casting Department: Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $9.10 per machine-hour × 50 machine-hours = $455 Assembly Department: Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $11.60 per direct labor-hour × 50 direct labor-hours = $580 Overhead applied to Job A182 Casting Department......................... Assembly Department..................... Total................................................. $455 580 $1,035 f. Direct materials.............................. Direct labor.................................... Manufacturing overhead applied.... Total cost of Job A182.................... Casting $895 $240 $455 Assembly $365 $1,200 $580 Total $1,260 1,440 1,035 $3,735 g. Total cost of Job A182........ Markup ($3,735.00 × 20%). Selling price........................ Difficulty: 1 Easy Learning Objective: 02-01 Learning Objective: 02-02 Learning Objective: 02-03 Learning Objective: 02-04 Topic Area: Blooms: Evaluate AACSB: Analytical Thinking AICPA: BB Reflective Thinking AICPA: FN Measurement $3,735.00 747.00 $4,482.00 [QUESTION] 277. Hultquist Corporation has two manufacturing departments--Forming and Customizing. The company used the following data at the beginning of the period to calculate predetermined overhead rates: Estimated total machine-hours (MHs)................................. Estimated total fixed manufacturing overhead cost............. Estimated variable manufacturing overhead cost per MH. . . Forming 9,000 $50,400 $1.70 Customizing Total 1,000 10,000 $2,600 $53,000 $2.10 During the period, the company started and completed two jobs--Job C and Job L. Data concerning those two jobs follow: Direct materials........................ Direct labor cost....................... Forming machine-hours........... Customizing machine-hours..... Job C Job L $15,100 $6,900 $20,800 $8,500 6,100 2,900 400 600 Required: a. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate that overhead rate. b. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job L. c. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the total manufacturing cost assigned to Job L. d. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 80% on manufacturing cost to establish selling prices. Calculate the selling price for Job L. e. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. What is the departmental predetermined overhead rate in the Forming department? f. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. What is the departmental predetermined overhead rate in the Customizing department? g. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job L? h. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 80% on manufacturing cost to establish selling prices. Calculate the selling price for Job L. Answer: a. The first step is to calculate the estimated total overhead costs in the two departments. Forming Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($1.70 per MH × 9,000 MHs)...... Estimated total manufacturing overhead cost................................................... $50,400 15,300 $65,700 Customizing Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($2.10 per MH × 1,000 MHs)...... Estimated total manufacturing overhead cost................................................... $2,600 2,100 $4,700 The second step is to combine the estimated manufacturing overhead costs in the two departments ($65,700 + $4,700 = $70,400) to calculate the plantwide predetermined overhead rate as follow: Estimated total manufacturing overhead cost ....... Estimated total machine hours............................... Predetermined overhead rate................................ $70,400 10,000 MHs $7.04 per MH b. The overhead applied to Job L is calculated as follows: Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job = $7.04 per MH x (2,900 MHs + 600 MHs) = $7.04 per MH x (3,500 MHs) = $24,640 c. Job L’s manufacturing cost: Direct materials.................................. Direct labor cost................................. Manufacturing overhead applied....... Total manufacturing cost.................... $6,900 8,500 24,640 $40,040 d. The selling price for Job L: Total manufacturing cost................ Markup (80%)................................ Selling price................................... $40,040 32,032 $72,072 e. Forming Department predetermined overhead rate: Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($1.70 per MH × 9,000 MHs)...... Estimated total manufacturing overhead cost (a).............................................. Estimated total machine-hours (b).................................................................... $50,400 15,300 $65,700 9,000 MHs Departmental predetermined overhead rate (a) ÷ (b)....................................... f. Customizing Department predetermined overhead rate: Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($2.10 per MH × 1,000 MHs)...... Estimated total manufacturing overhead cost (a).............................................. Estimated total machine-hours (b).................................................................... Departmental predetermined overhead rate (a) ÷ (b)...................................... g. Manufacturing overhead applied to Job L: Forming ($7.30 per MH × 2,900 MHs)................. Customizing ($4.70 per MH × 600 MHs).............. Total manufacturing overhead applied................. $7.30 per MH $2,600 2,100 $4,700 1,000 MHs $4.70 per MH $21,170 2,820 $23,990 h. The selling price for Job L would be calculated as follows: Direct materials....................................... $6,900 Direct labor cost...................................... 8,500 Manufacturing overhead applied............. 23,990 Total manufacturing cost......................... $39,390 Markup (80%).......................................... 31,512 Selling price............................................. $70,902 Difficulty: 2 Medium Learning Objective: 02-01 Learning Objective: 02-02 Learning Objective: 02-03 Learning Objective: 02-04 Topic Area: Blooms: Evaluate AACSB: Analytical Thinking AICPA: BB Reflective Thinking AICPA: FN Measurement [QUESTION] 278. Carcana Corporation has two manufacturing departments--Machining and Finishing. The company used the following data at the beginning of the period to calculate predetermined overhead rates: Estimated total machine-hours (MHs)................................. Estimated total fixed manufacturing overhead cost............. Estimated variable manufacturing overhead cost per MH. . . Machining 1,000 $4,200 $1.90 Finishing Total 4,000 5,000 $8,800 $13,000 $2.90 During the period, the company started and completed two jobs--Job E and Job G. Data concerning those two jobs follow: Direct materials........................ Direct labor cost....................... Machining machine-hours........ Finishing machine-hours.......... Job E Job G $11,800 $8,000 $19,200 $6,700 700 300 1,600 2,400 Required: a. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. What is the departmental predetermined overhead rate in the Machining department? b. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. What is the departmental predetermined overhead rate in the Finishing department? c. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job E? d. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job G? e. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 80% on manufacturing cost to establish selling prices. Calculate the selling price for Job E. f. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 80% on manufacturing cost to establish selling prices. Calculate the selling price for Job G. g. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. If both jobs were sold during the month, what was the company's cost of goods sold for the month? Answer: a. Machining Department predetermined overhead rate: Estimated fixed manufacturing overhead.......................................................... $4,200 Estimated variable manufacturing overhead ($1.90 per MH × 1,000 MHs)...... 1,900 Estimated total manufacturing overhead cost (a).............................................. $6,100 Estimated total machine-hours (b).................................................................... 1,000 MHs Departmental predetermined overhead rate (a) ÷ (b)....................................... $6.10 per MH b.Finishing Department predetermined overhead rate: Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($2.90 per MH × 4,000 MHs)...... Estimated total manufacturing overhead cost (a).............................................. Estimated total machine-hours (b).................................................................... Departmental predetermined overhead rate (a) ÷ (b)...................................... c. Manufacturing overhead applied to Job E: Machining ($6.10 per MH × 700 MHs)................. Finishing ($5.10 per MH × 1,600 MHs)................ Total manufacturing overhead applied................. $4,270 8,160 $12,430 d. Manufacturing overhead applied to Job G: Machining ($6.10 per MH × 300 MHs)................. Finishing ($5.10 per MH × 2,400 MHs)................ Total manufacturing overhead applied................. $1,830 12,240 $14,070 e. The selling price for Job E would be calculated as follows: Direct materials....................................... $11,800 Direct labor cost...................................... 19,200 Manufacturing overhead applied............. 12,430 Total manufacturing cost......................... $43,430 Markup (80%).......................................... 34,744 Selling price............................................. $78,174 f. The selling price for Job G would be calculated as follows: Direct materials....................................... $8,000 Direct labor cost...................................... 6,700 Manufacturing overhead applied............. 14,070 Total manufacturing cost......................... $28,770 Markup (80%).......................................... 23,016 Selling price............................................. $51,786 g. $8,800 11,600 $20,400 4,000 MHs $5.10 per MH Total manufacturing cost Job E.............. Total manufacturing cost Job G.............. Cost of goods sold................................. Difficulty: 2 Medium Learning Objective: 02-01 Learning Objective: 02-02 Learning Objective: 02-03 Learning Objective: 02-04 Topic Area: Blooms: Evaluate AACSB: Analytical Thinking AICPA: BB Reflective Thinking AICPA: FN Measurement $43,430 28,770 $72,200 [QUESTION] 279. Braegelmann Corporation has two production departments, Casting and Assembly. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department’s predetermined overhead rate is based on machine-hours and the Assembly 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: Machine-hours.................................................................. Direct labor-hours.............................................................. Total fixed manufacturing overhead cost........................... Variable manufacturing overhead per machine-hour......... Variable manufacturing overhead per direct labor-hour..... Casting 20,000 4,000 $110,000 $1.60 Assembly 14,000 6,000 $65,400 $4.50 During the current month the company started and finished Job K246. The following data were recorded for this job: Job K246: Machine-hours............. Direct labor-hours......... Direct materials............ Direct labor cost........... Casting 60 20 $950 $460 Assembly 30 40 $305 $920 Required: a. Calculate the estimated total manufacturing overhead for the Casting Department. b. Calculate the estimated total manufacturing overhead for the Assembly Department. c. Calculate the predetermined overhead rate for the Casting Department. d. Calculate the predetermined overhead rate for the Assembly Department. e. Calculate the amount of overhead applied in the Casting Department to Job K246. f. Calculate the amount of overhead applied in the Assembly Department to Job K246. g. Calculate the total job cost for Job K246. h. Calculate the selling price for Job K246 if the company marks up its unit product costs by 40% to determine selling prices. Answer: a. Casting Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department) = $110,000 + ($1.60 per machine-hour × 20,000 machine-hours) = $110,000 +$32,000 = $142,000 b. Assembly Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct laborhour × Total direct labor-hours in the department) = $65,400 + ($4.50 per direct labor-hour × 6,000 direct labor-hours) = $65,400 + $27,000 = $92,400 c. Casting Department: Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $142,000 ÷ 20,000 machine-hours = $7.10 per machine-hour d. Assembly Department: Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $92,400 ÷6,000 direct labor-hours = $15.40 per direct labor-hour e. Casting Department: Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $7.10 per machine-hour × 60 machine-hours = $426 f. Assembly Department: Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $15.40 per direct labor-hour × 40 direct labor-hours = $616 g. Direct materials.............................. Direct labor.................................... Manufacturing overhead applied.... Total cost of Job K246.................... Casting $950 $460 $426 Assembly $305 $920 $616 Total $1,255 1,380 1,042 $3,677 h. Total cost of Job K246........ Markup ($3,677.00 × 40%). Selling price........................ Difficulty: 1 Easy Learning Objective: 02-01 Learning Objective: 02-02 Learning Objective: 02-03 Learning Objective: 02-04 Topic Area: Blooms: Evaluate AACSB: Analytical Thinking AICPA: BB Reflective Thinking AICPA: FN Measurement $3,677.00 1,470.80 $5,147.80 [QUESTION] 280. Matrejek Corporation has two manufacturing departments--Forming and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates: Estimated total machine-hours (MHs)................................. Estimated total fixed manufacturing overhead cost............. Estimated variable manufacturing overhead cost per MH. . . Forming 8,000 $36,800 $1.60 Customizing Total 2,000 10,000 $4,800 $41,600 $2.90 During the most recent month, the company started and completed two jobs--Job D and Job K. There were no beginning inventories. Data concerning those two jobs follow: Direct materials........................ Direct labor cost....................... Forming machine-hours........... Customizing machine-hours..... Job D Job K $15,600 $6,900 $19,100 $8,700 5,400 2,600 800 1,200 Required: a. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 50% on manufacturing cost to establish selling prices. Calculate the selling price for Job D. b. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 50% on manufacturing cost to establish selling prices. Calculate the selling price for Job K. c. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 50% on manufacturing cost to establish selling prices. Calculate the selling price for Job D. d. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 50% on manufacturing cost to establish selling prices. Calculate the selling price for Job K. Answer: a. The first step is to calculate the estimated total overhead costs in the two departments. Forming Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($1.60 per MH × 8,000 MHs)...... Estimated total manufacturing overhead cost................................................... $36,800 12,800 $49,600 Customizing Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($2.90 per MH × 2,000 MHs)...... Estimated total manufacturing overhead cost................................................... $4,800 5,800 $10,600 The second step is to combine the estimated manufacturing overhead costs in the two departments ($49,600 + $10,600 = $60,200) to calculate the plantwide predetermined overhead rate as follow: Estimated total manufacturing overhead cost ....... Estimated total machine hours............................... Predetermined overhead rate................................ $60,200 10,000 MHs $6.02 per MH The overhead applied to Job D is calculated as follows: Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job = $6.02 per MH x (5,400 MHs + 800 MHs) = $6.02 per MH x (6,200 MHs) = $37,324 The selling price for Job D: Direct materials.................................. Direct labor cost................................. Manufacturing overhead applied....... Total manufacturing cost.................... Markup (50%).................................... Selling price....................................... $15,600 19,100 37,324 $72,024 36,012 $108,036 b. The overhead applied to Job K is calculated as follows: Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job = $6.02 per MH x (2,600 MHs + 1,200 MHs) = $6.02 per MH x (3,800 MHs) = $22,876 Job K’s manufacturing cost: Direct materials.................................. Direct labor cost................................. Manufacturing overhead applied....... $6,900 8,700 22,876 Total manufacturing cost.................... The selling price for Job K: Total manufacturing cost................ Markup (50%)................................ Selling price................................... $38,476 $38,476 19,238 $57,714 c. Forming Department predetermined overhead rate: Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($1.60 per MH × 8,000 MHs)...... Estimated total manufacturing overhead cost (a).............................................. Estimated total machine-hours (b).................................................................... Departmental predetermined overhead rate (a) ÷ (b)....................................... $36,800 12,800 $49,600 8,000 MHs $6.20 per MH Customizing Department predetermined overhead rate: Estimated fixed manufacturing overhead.......................................................... Estimated variable manufacturing overhead ($2.90 per MH × 2,000 MHs)...... Estimated total manufacturing overhead cost (a).............................................. Estimated total machine-hours (b).................................................................... Departmental predetermined overhead rate (a) ÷ (b)...................................... $4,800 5,800 $10,600 2,000 MHs $5.30 per MH Manufacturing overhead applied to Job D: Forming ($6.20 per MH × 5,400 MHs)................. Customizing ($5.30 per MH × 800 MHs).............. Total manufacturing overhead applied................. $33,480 4,240 $37,720 The selling price for Job D would be calculated as follows: Direct materials....................................... $15,600 Direct labor cost...................................... 19,100 Manufacturing overhead applied............. 37,720 Total manufacturing cost......................... $72,420 Markup (50%).......................................... 36,210 Selling price............................................. $108,630 d. Manufacturing overhead applied to Job K: Forming ($6.20 per MH × 2,600 MHs)................. Customizing ($5.30 per MH × 1,200 MHs)........... Total manufacturing overhead applied................. $16,120 6,360 $22,480 The selling price for Job K would be calculated as follows: Direct materials....................................... $6,900 Direct labor cost...................................... 8,700 Manufacturing overhead applied............. 22,480 Total manufacturing cost......................... $38,080 Markup (50%).......................................... 19,040 Selling price............................................. $57,120 Difficulty: 2 Medium Learning Objective: 02-01 Learning Objective: 02-02 Learning Objective: 02-03 Learning Objective: 02-04 Topic Area: Blooms: Evaluate AACSB: Analytical Thinking AICPA: BB Reflective Thinking AICPA: FN Measurement