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 151,000 Fixed manufacturing overhead cost $ 653,000 Variable manufacturing overhead cost per machine-hour $ 4.20

Required: A. Compute the plantwide predetermined overhead rate.

B. During the year, Job 400 was started and completed. The following information was available with respect to this job: Direct materials $ 310 Direct labor cost $ 240 Machine-hours used 38 Compute the total manufacturing cost assigned to Job 400.

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

A. Plantwide predetermined overhead rate = [ Estimated fixed manufacturing overhead cost / Estimated machine hours ] + Estimated variable maunfacturing overhead cost per machine hour = [ $653,000 / 151,000 machine hours ] + $4.20 = $4.32 + $4.20 = $8.52

B. Calculation of total manufacturing cost of Job 400 :

Direct materials	$310
(+) Direct labor	$240
(+) Manufacturing overhead [ Machine hours used * Plantwide predetermined overhead rate = 38 hours * $8.52 ]	$323.76
Total manufacturing cost	$873.76

C. Unit product cost for Job 400 = Total maunfacturing cost / Units produced = $873.76 / 50 units = $17.48

D. Selling price per unit for Job 400 = Manufacturing cost per unit + Markup = $17.48 + ( $17.48 * 110% ) = $17.48 + $19.23 = $36.71

Note : In the absence of any information regarding rouding off, the answers are rouded off to the two decimal places.