Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 40% on manufacturing cost to establish selling prices.The calculated selling price for Job M is closest to:

A) $46,154
B) $41,958
C) $29,970
D) $11,988

Question

Fatima Zahidi · Accepted Answer

Final Answer : B, Explanation :  To find out the manufacturing cost for Job M, we need to use the predetermined manufacturing overhead rate based on machine-hours. Let's assume that this rate is $20 per machine-hour. We can calculate the manufacturing cost for Job M as follows:Manufacturing cost = Direct materials + Direct labor + Manufacturing overheadManufacturing cost = $15,000 + $18,000 + ($20 per machine-hour x 800 machine-hours)Manufacturing cost = $15,000 + $18,000 + $16,000Manufacturing cost = $49,000Now, we can use the markup of 40% on manufacturing cost to establish the selling price:Selling price = Manufacturing cost x (1 + Markup)Selling price = $49,000 x (1 + 0.4)Selling price = $49,000 x 1.4Selling price = $68,600The closest option to this value is B: $41,958. The first step is to calculate the estimated total overhead costs in the two departments.Machining   Assembly   The second step is to combine the estimated manufacturing overhead costs in the two departments ($5,900 + $19,600 = $25,500)to calculate the plantwide predetermined overhead rate as follow:   The overhead applied to Job M is calculated as follows:Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job= $5.10 per MH x (300 MHs + 2,400 MHs)= $5.10 per MH x (2,700 MHs)= $13,770Job M's manufacturing cost:   The selling price for Job M:   Reference: CH02-Ref14Decorte Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours.The company based its predetermined overhead rate for the current year on the following data:   Recently, Job K332 was completed with the following characteristics:

Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 40% on manufacturing cost to establish selling prices.The calculated selling price for Job M is closest to:

A) $46,154
B) $41,958
C) $29,970
D) $11,988

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Learning Objectives

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Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 40% on manufacturing cost to establish selling prices.The calculated selling price for Job M is closest to:A) $46,154B) $41,958C) $29,970D) $11,988

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Learning Objectives

Learning Objectives

Related questions

Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 40% on manufacturing cost to establish selling prices.The calculated selling price for Job M is closest to:

A) $46,154
B) $41,958
C) $29,970
D) $11,988