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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) 6,500 3,500 10,000

Estimated total fixed manufacturing overhead cost $ 16,000 $ 4,100 $ 20,100

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 $ 15,300 $ 9,000

Direct labor cost $ 22,200 $ 8,900

Molding machine-hours 2,500 4,000

Finishing machine-hours 2,500 1,000

 


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:

A)$54,300 B)$70,590 C)$87,900 D)$16,290

Please explain correct answer.

Top Answer

PLEASE NOTE: CALCULATION OF FIXED OVERHEAD ABSORPTION RATE: MOLDING MACHINE= $16,000/6,500... View the full answer

tutor selling price of job A-1.jpg

The calculated selling price for Job A is closest to
S
Direct materials
15,300
Direct labor cost
22,200
Variable overheads:
Molding machine ( 2,500*$ 1)=
$2,500
Finishing machine (2,500*$2)=...

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