Question

Molash Corporation has two manufacturing departments--Machining and Assembly. The company used the following data at the beginning of the year to calculate predetermined overhead rates:

	Machining		Assembly		Total
Estimated total machine-hours (MHs)		2,000		3,000		5,000
Estimated total fixed manufacturing overhead cost	$	9,400	$	8,100	$	17,500
Estimated variable manufacturing overhead cost per MH	$	1.80	$	2.40

During the most recent month, the company started and completed two jobs--Job B and Job L. There were no beginning inventories. Data concerning those two jobs follow:

	Job B		Job L
Direct materials	$	14,400	$	7,100
Direct labor cost	$	23,500	$	6,700
Machining machine-hours		1,400		600
Assembly machine-hours		1,200		1,800

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 50% on manufacturing cost to establish selling prices. The calculated selling price for Job L is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

· Calculated selling price for Job L is closest to = $ 40,320

· Calculation

Working		Machining Department:	Assembly Department:
A	Total Fixed Overheads	$                            9,400	$                              8,100
B	Total machine hours	2,000	3,000
C = A/B	Fixed overhead rate	$                               4.70	$                                 2.70
D	Variable Overhead rate	$                               1.80	$                                 2.40
E = C+D	Predetermined Departmental Overhead rates	$                               6.50	$                                 5.10

	Job L
Direct material cost	$                            7,100
Direct Labor cost	$                            6,700
Manufacturing Overhead – Machining (600 x 6.50)	$                            3,900
Manufacturing Overhead - Assembly (1800 x 5.10)	$                            9,180
Total manufacturing cost assigned	$                          26,880

		Job L
A	Total manufacturing cost assigned	$                          26,880
B = A x 150%	Sale Price	$                          40,320