Question

Spencer Corporation has two manufacturing departments--Forming and Customizing. The company used the following data at the beginning of the period to calculate predetermined overhead rates: Forming Customizing Total Estimated total machine-hours (MHs) 6,000 4,000 10,000 Estimated total fixed manufacturing overhead cost $ 12,600 $ 10,800 $ 23,400 Estimated variable manufacturing overhead cost per MH $ 2.50 $ 5.00 During the period, the company started and completed two jobs--Job C and Job L. Data concerning those two jobs follow: Job C Job L Direct materials $ 13,700 $ 7,700 Direct labor cost $ 20,800 $ 7,600 Forming machine-hours 2,500 3,500 Customizing machine-hours 2,500 1,500 Required: a. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate that overhead rate. (Round your answer to 2 decimal places.) b. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job L. (Do not round intermediate calculations.) c. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the total manufacturing cost assigned to Job L. (Do not round intermediate calculations.) d. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 20% on manufacturing cost to establish selling prices. Calculate the selling price for Job L. (Do not round intermediate calculations.) e. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. What is the departmental predetermined overhead rate in the Forming department? (Round your answer to 2 decimal places.) f. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. What is the departmental predetermined overhead rate in the Customizing department? (Round your answer to 2 decimal places.) g. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job L? (Do not round intermediate calculations.) h. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. Further assume that the company uses a markup of 20% on manufacturing cost to establish selling prices. Calculate the selling price for Job L. (Do not round intermediate calculations.)

Answer 1

The following required are for Spencer corporation are as follows

a) Predetermine overhead rate = (7000*2+3000*4+22800)/10000 = 4.88 per Machine hour

b) Manufacturing overhead applied = 5000*4.88 = 24400

c) Manufacturing cost = 8500+8600+24400 = 41500

d) Selling price = 41500*1.2 = 49800

e) Forming predetermine overhead rate = (14700/7000+2) = 4.10 per Machine hour

f) Customizing predetermine overhead rate = (8100/3000+4) = 6.70 per Machine hour

g) Manufacturing overhead applied = (4500*4.1+500*6.7) = 21800

h) Selling price = (8500+8600+21800)*1.2 = 46680