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 TotalEstimated total machine-hours (MHs) 9,000 3,600 12,600Estimated total fixedmanufacturing overheadcost $36,000 $13,320 $49,320Estimated variablemanufacturing overheadcost per MH $2.50 $3.00During 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 MDirect materials $16,700 $9,900Direct labor cost $23,400 $10,300Molding machine-hours 2,700 6,300Customizing machine-hours 3,000 600Required: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 $93,300

Selling price for Job M $78,204

Step-by-step explanation:

The computation of the selling prices for Job C and for Job M is given below:

But before that following calculations need to be done

Departmental overhead rates:

Molding 6.50 (2.5 + (36000 ÷ 9000))

Customizing 6.70 (3 + (13320 ÷ 3600)

Particulars Job C Job M

Direct materials $16,700 $9,900

Direct labor cost $23,400 $10,300

Overhead applied:

Molding $17,550 $40,950

(2700 × 6.50) (6300 × 6.50)

Customizing $20,100 $4,020

(3000 × 6.70) (600 × 6.70)

Total manufacturing cost $77,750 $65,170

Add: Markup at 20% $15,550 $13,034

Selling price $93,300 $78,204