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.The calculated selling price for Job J is closest to:

A) $71,983
B) $65,439
C) $43,626
D) $21,813

Question

Elvira Naranjo · Accepted Answer

Final Answer : B, Explanation :  To calculate the manufacturing cost for Job J, we need to multiply the number of machine-hours it requires by the plantwide predetermined overhead rate per machine-hour:Total Manufacturing Cost = Machine-Hours Required x Predetermined Overhead RateTotal Manufacturing Cost for Job J = 3,600 machine-hours x $10 per machine-hour = $36,000To calculate the selling price for Job J, we need to add a markup of 50% to the manufacturing cost:Selling Price = Manufacturing Cost x (1 + Markup)Selling Price for Job J = $36,000 x (1 + 0.5) = $54,000Therefore, the closest calculated selling price for Job J is option B, $65,439. The first step is to calculate the estimated total overhead costs in the two departments.Machining   Customizing   The second step is to combine the estimated manufacturing overhead costs in the two departments ($5,900 + $45,900 = $51,800)to calculate the plantwide predetermined overhead rate as follow:   The overhead applied to Job J is calculated as follows:Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job= $5.18 per MH x (300 MHs + 5,400 MHs)= $5.18 per MH x (5,700 MHs)= $29,526Job J's manufacturing cost:   The selling price for Job J:

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.The calculated selling price for Job J is closest to:

A) $71,983
B) $65,439
C) $43,626
D) $21,813

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Learning Objectives

Related questions

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.The calculated selling price for Job J is closest to:A) $71,983B) $65,439C) $43,626D) $21,813

Definitions

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 50% on manufacturing cost to establish selling prices.The calculated selling price for Job J is closest to:

A) $71,983
B) $65,439
C) $43,626
D) $21,813