Question

# 10. Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based...

10.

Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:

Total machine-hours 32,500 \$455,000 \$ 5.00

Recently, Job T687 was completed with the following characteristics:

Number of units in the job 10 40 \$ 710 \$1,420

If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)

12.

Garza Corporation has two production departments, Casting and Customizing. 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 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:

Casting Customizing
Machine-hours 25,000 24,000
Direct labor-hours 7,000 7,000
Total fixed manufacturing overhead cost \$145,000 \$35,000
Variable manufacturing overhead per machine-hour \$ 1.10
Variable manufacturing overhead per direct labor-hour \$ 3.20

The estimated total manufacturing overhead for the Customizing Department is closest to:

Solution :

Step 1 : Predetermined OH Rate :

Predetermined OH Rate = Fixed OH per Machine Hour + Variable OH per Hour

Fixed OH rate per Machine Hour = Total Estimated OH / Total Machine Hours

= \$ 455,000 / 32,500

= \$ 14.00 per MH

Predetermined OH Rate = \$ 14 + \$ 5 = \$ 19 per MH

Step 2 : Calculation of Selling Price of Job :

 (a) Direct Material \$ 710.00 (b) Direct Labor \$ 1,420.00 (c) Overhead (40 * \$ 19) \$ 760.00 (d) Total Cost \$ 2,890.00 (e) Mark up (d * 40%) \$ 1,156.00 (d) Selling Price (d + e) \$ 4,046.00

Manufacturing OH for Customizing Department :

 Fixed Manufacturing Overhead Cost \$ 35,000 Variable Manufacturing OH (7,000 LHs * \$ 3.20) \$ 22,400 Total Manufacturing OH \$ 57,400

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