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 159,000 Fixed manufacturing overhead cost $ 653,000 Variable manufacturing overhead cost per machine-hour $ 4.10

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 $ 370 Direct labor cost $ 220 Machine-hours used 32 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 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?

Answer 1

• Requirement 1

A	Fixed manufacturing overhead cost	$                  653,000
B	Machine hours required	159,000	machine hours
C = A/B	Fixed overhead rate	$                         4.11	per machine hour
D	Variable overhead rate	$                         4.10	per machine hour
E = C+D	Plantwide Predetermined Overhead rate	$                         8.21	per machine hour

• Requirement 2

A	Direct materials	$                           370
B	Direct labor cost	$                           220
C	Overheads (52 hours x $ 8.21]	$                           263
D = A+B+C	Total manufacturing cost for the Job	$                           853 Answer

• Requirement 3

D	Total cost for the Job	$                           853
E	Total units for Job 400	50
F = D/E	Units product cost for Job 400	$                       17.05	Answer

• Requirement 4

A	Units product cost for Job 400	$                       17.05
B = A x 120%	Mark up at 120%	$                       20.47
C = A+B	Selling price per unit	$                       37.52	Answer