Question

Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

Machine-hours required to support estimated production		160,000
Fixed manufacturing overhead cost	$	655,000
Variable manufacturing overhead cost per machine-hour	$	4.60

Required:

1. Compute the plantwide predetermined overhead rate.

2. During the year, Job 400 was started and completed. The following information was available with respect to this job:

Direct materials	$	320
Direct labor cost	$	280
Machine-hours used		38

Compute the total manufacturing cost assigned to Job 400.

3. If Job 400 includes 50 units, what is the unit product cost for this job?

4. If Moody uses a markup percentage of 110% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?

Answer 1

1	Plant Wide Predetermined Overhead Rate per Machine Hour
	Variable Manufacturing Overhead Rate	=	$4.60
	Fixed Manucfacturing Overhead Rate	=	$4.09
.	Plant Wide Predetermined Overhead Rate per Machine Hour	=	$8.69
	Working Note:
	Fixed Manucfacturing Overhead Rate	=	Budgeted Fixed Mnufacturing Overheads / Budgeted Machine Hours
		=	$655,000/160000 hrs.
		=	$4.09
2	Total Manufacturing Cost Assigned to the Job 400
	Direct Material			$320.00
	Direct Production Labour Costs			$280.00
	Manufacturing Overheads	38hrs. * $8.69		$330.22
				$930.22
3	Unit Product Manufacturing Cost	$930.22 / 50 Units		$18.60
4	Selling Price Per Unit
	Unit Product Manufacturing Cost			$18.60
	Mark-up	($18.6*110%)		$20.46
	Selling Price Per Unit			$39.06