Question

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
Total fixed manufacturing overhead cost	$455,000
Variable manufacturing overhead per machine-hour	$ 5.00

Recently, Job T687 was completed with the following characteristics:

Number of units in the job	10
Total machine-hours	40
Direct materials	$ 710
Direct labor cost	$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:

Answer 1

Solution :

Answer (10) :

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

Answer (12) :

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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