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)		9,000		2,600		11,600
Estimated total fixed manufacturing overhead cost	$	36,000	$	9,360	$	45,360
Estimated variable manufacturing overhead cost per MH	$	2.50	$	5.00

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	$	15,500	$	9,100
Direct labor cost	$	22,300	$	9,300
Molding machine-hours		1,250		7,750
Customizing machine-hours		2,100		500

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. (Do not round intermediate calculations.)

Answer 1

• Requirement asked

		Job C	Job M
A	Total manufacturing cost assigned	$                          63,985	$                            73,075
B = A x 120%	Selling Price = ANSWERS	$                          76,782	$                            87,690

• Working

Working		Molding Department:	Customization Department:
A	Total Fixed Overheads	$                          36,000	$                              9,360
B	Total machine hours	9,000	2,600
C = A/B	Fixed overhead rate	$                               4.00	$                                 3.60
D	Variable Overhead rate	$                               2.50	$                                 5.00
E = C+D	Predetermined Departmental Overhead rates	$                               6.50	$                                 8.60

	Job C	Job M
Direct material cost	$                          15,500	$                              9,100
Direct Labor cost	$                          22,300	$                              9,300
Molding Department:
Manufacturing Overhead	$                            8,125	$                            50,375
Customization n Department:
Manufacturing Overhead	$                          18,060	$                              4,300
Total manufacturing cost assigned	$                          63,985	$                            73,075