Question

Kluth Corporation has two manufacturing departments--Molding and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:

	Molding		Customizing		Total
Estimated total machine-hours (MHs)		15,000		2,000		17,000
Estimated total fixed manufacturing overhead cost	$	48,000	$	4,000	$	52,000
Estimated variable manufacturing overhead cost per MH	$	2.00	$	4.00

During the most recent month, the company started and completed two jobs--Job C and Job M. There were no beginning inventories. Data concerning those two jobs follow:

	Job C		Job M
Direct materials	$	14,800	$	8,500
Direct labor cost	$	21,700	$	8,600
Molding machine-hours		2,500		12,500
Customizing machine-hours		1,000		1,000

Required:

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 prices for Job C and for Job M.

Answer 1

	Selling price for Job C			66,600
	Selling price for Job M			105,720
				Molding	Customizing
	estimated FOH			48,000	4,000
	estimated total MH's			15,000	2,000
	estimated FOH per hr			3.2	2
	estimated VOH per hr			2	4
	total predetermined OH rate			5.2	6
	total manufacturing cost
				job C	Job M
	Direct materials			14,800	8,500
	Direct labor cost			21,700	8,600
	overhead allocated
	Molding			13000	65000
	Customizing			6000	6000
	total manufacturing cost			55,500	88,100
	markup 20%			11100	17620
	selling price			66,600	105,720