Question

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

Molding Finishing Total
Estimated total machine-hours (MHs) 3,250 3,000 6,250
Estimated total fixed manufacturing overhead cost $27,000 $4,700 $31,700
Estimated variable manufacturing overhead cost per MH $ 1.00 $ 2.00
During the most recent month, the company started and completed two jobs--Job A and Job M. There were no beginning inventories. Data concerning those two jobs follow:
Job A Job M
Direct materials $15,900 $ 9,700
Direct labor cost $ 23,000 $ 9,500
Molding machine-hours 1,250 2,000
Finishing machine-hours 1,750 500
Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 30% on manufacturing cost to establish selling prices. The calculated selling price for Job A is closest to: (Round your intermediate calculations to 2 decimal places.)
a) $58,550
b) $99,500
c) $76,115
d) $17,565

Answer 1

To calculate the selling price for Job A, combine direct materials, labor, and overhead costs then apply a 30% markup. The predetermined overhead rate is calculated, overhead costs are computed, and all costs are then summed and marked up. The final selling price does not match any of the provided options.

Step-by-step explanation:

To calculate the selling price for Job A, we first need to determine the total manufacturing cost, which includes direct materials, direct labor, and both fixed and variable manufacturing overhead costs. Afterward, we apply the 30% markup to set the selling price. Let's break down the calculation step by step.

Determine total machine-hours (MHs) used by Job A: 1,250 (Molding) + 1,750 (Finishing) = 3,000 MHs

Calculate the plantwide predetermined overhead rate by dividing the total estimated manufacturing overhead cost by the total estimated machine hours: $31,700 / 6,250 MHs = $5.072 per MH (rounded at two decimal places)

Compute total overhead costs for Job A: 3,000 MHs x $5.072/MH = $15,216 (rounded at two decimal places)

Add up all costs for Job A to find the total manufacturing cost: $15,900 (Direct materials) + $23,000 (Direct labor) + $15,216 (Overhead) = $54,116

Finally, calculate the selling price by adding a 30% markup to the total manufacturing cost: $54,116 x 1.30 = $70,350.80

Reviewing the options provided, none of the choices exactly match the calculated selling price of $70,350.80. Therefore, an error might be present, or the provided options could be incorrect.

Answer 2

Results are below.

Step-by-step explanation:

Giving the following information:

Estimated total machine-hours (MHs)= 6,250

Estimated total fixed manufacturing overhead cost= $31,700

Estimated variable manufacturing overhead cost= (1*3,250 + 2*3,000)= $9,250

Job A

Direct materials $15,900

Direct labor cost $ 23,000

Molding machine-hours 1,250

Finishing machine-hours 1,750

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (31,700 + 9,250)/6,250

Predetermined manufacturing overhead rate= $6.55 per machine hour

Now, we can calculate the total cost of Job A:

Total cost= 15,900 + 23,000 + 6.55*3,000

Total cost= $58,550

Finally, the selling price for Job A:

Selling price= 58,550*1.3= $76,115