Question

1. 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)		14,000		1,800		15,800
Estimated total fixed manufacturing overhead cost	$	35,000	$	5,040	$	40,040
Estimated variable manufacturing overhead cost per MH	$	2.00	$	4.00

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	$	14,700	$	8,400
Direct labor cost	$	21,600	$	8,400
Molding machine-hours		2,700		11,300
Customizing machine-hours		1,200		600

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.)

	Selling price for Job C Selling price for Job M

2. Hultquist Corporation has two manufacturing departments--Forming and Customizing. The company used the following data at the beginning of the period to calculate predetermined overhead rates:

	Forming		Customizing		Total
Estimated total machine-hours (MHs)		5,000		5,000		10,000
Estimated total fixed manufacturing overhead cost	$	17,500	$	17,000	$	34,500
Estimated variable manufacturing overhead cost per MH	$	1.50	$	3.00

During the period, the company started and completed two jobs--Job C and Job L. Data concerning those two jobs follow:

	Job C		Job L
Direct materials	$	14,500	$	8,200
Direct labor cost	$	21,400	$	8,200
Forming machine-hours		1,250		3,750
Customizing machine-hours		1,250		3,750

Required:

a. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate that overhead rate. (Round your answer to 2 decimal places.)

b. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the amount of manufacturing overhead applied to Job L. (Do not round intermediate calculations.)

c. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours. Calculate the total manufacturing cost assigned to Job L. (Do not round intermediate calculations.)

d. Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 20% on manufacturing cost to establish selling prices. Calculate the selling price for Job L. (Do not round intermediate calculations.)

e. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments. What is the departmental predetermined overhead rate in the Forming department? (Round your answer to 2 decimal places.)

f. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. What is the departmental predetermined overhead rate in the Customizing department? (Round your answer to 2 decimal places.)

g. Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments. How much manufacturing overhead will be applied to Job L? (Do not round intermediate calculations.)

h. 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 price for Job L. (Do not round intermediate calculations.)

Answer 1

1	Departmental predetermined overhead rates=Total manufacturing overhead cost for the department/Total machine hours for the department
	Total manufacturing overhead cost:
							Molding	Customizing
	Estimated total machine-hours					a	14000	1800
	Estimated total fixed manufacturing overhead cost					b	35000	5040
	Estimated variable manufacturing overhead cost					c	28000	7200
	(Oh cost per machine hour*Machine hours)						(14000*2)	(1800*4)
	Total manufacturing overhead cost					d=b+c	63000	12240
	Departmental predetermined overhead rates					d/a	4.5	6.8
	Manufacturing overhead applied=Departmental predetermined overhead rate*Machine hours in the department
	Selling price for Job:
					Job C	Job M
	Direct materials				14700	8400
	Direct labor cost				21600	8400
	Manufacturing overhead applied
	Molding				12150	50850
					(4.5*2700)	(4.5*11300)
	Customizing				8160	4080
					(6.8*1200)	(6.8*600)
	Total costs for the job				56610	71730
	Add: markup at 20%				11322	14346
	Selling price				67932	86076
2
a.	Plantwide predetermined manufacturing overhead rate=Total fixed manufacturing overhead/Total machine hours
							Forming	Customizing	Total
	Estimated total machine-hours					a	5000	5000	10000
	Estimated total fixed manufacturing overhead cost					b	17500	17000	34500
	Estimated variable manufacturing overhead cost					c	7500	15000	44500
	(OH cost per machine hour*Machine hours)						(5000*1.5)	(5000*3)
	Total manufacturing overhead cost					d=b+c	25000	32000	57000
	Plantwide predetermined overhead rate					d/a			5.7
b.	Manufacturing overhead applied to Job L=Machine hours in job L*Plantwide PDOH rate=(3750+3750)*5.7=$ 42750
c.	Total manufactring cost to Job L:
					$
	Direct materials				8200
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