Question

Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

Machine-hours required to support estimated production 151,000

Fixed manufacturing overhead cost $ 658,000

Variable manufacturing overhead cost per machine-hour $ 4.90

Required: 1. Compute the plantwide predetermined overhead rate.

2. During the year, Job 400 was started and completed.

The following information was available with respect to this job:

Direct materials $ 350

Direct labor cost $ 260

Machine-hours used 39

Compute the total manufacturing cost assigned to Job 400.

3. If Job 400 includes 50 units, what is the unit product cost for this job?

4. If Moody uses a markup percentage of 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?

Answer 1

1. Plantwide Overhead rate = Fixed Mfg. Overhead / Estimated Machine Hours = 658000/151000 = 4.38

2.Calculation of total Mfg. cost of Job 400:

Direct Material	350.00
Direct Labour Cost	260.00
Fixed Mfg. Overhead	170.04
Variable Mfg. Overhead	191.10
Total Cost	971.14

3.

Unit product cost = 971.14 / 50 = 19.42

4.

Selling Price = 19.42 + 20% = 23.30