Maria Company uses a job order costing system with a plantwide overhead rate on machine-hours. At the beginning of the year, the company made the following estimates:
Machine Hours estimated to support estimated production |
210,000 |
Fixed manufacturing overhead cost |
$3,360,000.00 |
Variable manufacturing overhead cost per machine-hour |
$ 2.00 |
During the year, Job P90 was started, completed, and sold to the customer. The following information was available with respect to this job.
Direct materials |
$1,564.00 |
Direct labor cost |
$1,122.00 |
Machine-hours used |
81 |
Required:
a. Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing overhead assigned to Job P90.
c. Compute the unit product cost of Job P90.
d. If the company uses a markup of 50%, compute the selling price for Job P90.
a. Plantwide predetermined overhead rate = Fixed manufacturing overhead cost / Machine Hours estimated
= $3,360,000 / 210,000
= $16 per machine hour
b. Total manufacturing overhead assigned to Job P90 = (Variable overhead rate per hour + Fixed overhead rate per hour)*Machine-hours used
= (2+16)*81
= $1,459
c. Unit product cost of Job P90 = Direct material + Direct labor + Total manufacturing overhead cost
=1564+1122+1459
= $4,145
d. Selling price for Job P90 = Unit product cost of Job P90 + Unit product cost of Job P90 *50%
= $4,145 + $4,145*50%
= $6217.50
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