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Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours
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 155,000Fixed manufacturing overhead cost$654,000Variable manufacturing overhead cost per machine-hour$4.20
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$350Direct labor cost$240Machine-hours used 37
Compute the total manufacturing cost assigned to Job 400.
3. If Job 400 includes 60 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?
Expert Solution
a)Compute the plantwide predetermined overhead rate:
- Plantwide predetermined overhead rate (Variable)= $4.20 per machine hour
- Plantwide predetermined overhead rate (Fixed)=[$654,000/155,000]=$4.22 per machine hour
- The unit product cost for this job=[$901.54/60]= $15.03 per unit
- Selling price per unit=[ $15.03 + $18.03 ]= $33.06
Step-by-step explanation
- Plantwide predetermined overhead rate=[Total overheads/Total machine hours]
- Plantwide predetermined overhead rate (Variable)= $4.20 per machine hour
- Plantwide predetermined overhead rate (Fixed)=[$654,000/155,000]=$4.22 per machine hour
- Calculate the cost of Job 400 as:
- Cost of Job=[Direct material cost+Direct labor cost+ Variable production overheads+Fixed production overhead]
- Variable production overheads=[ 37 hours @$4.20]=$155.40
- Fixed production overhead=[ 37 hours @$4.22]=$156.14
- Cost of Job 400=[$350+$240+$155.40+$156.14]=$901.54
- The unit product cost for this job= [Total cost of job/ Number of units in the job]
- The unit product cost for this job=[$901.54/60]= $15.03 per unit
- Selling price per unit=[ Cost per unit + Profit ]
- Profit =[120%*$15.03 ]=$18.03
- Selling price per unit=[ $15.03 + $18.03 ]= $33.06
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