Question

Moody Corporation uses a job-order costing system with a plant wide 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		155,000
Fixed manufacturing overhead cost	$	651,000
Variable manufacturing overhead cost per machine-hour	$	4.90

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	$	390
Direct labor cost	$	260
Machine-hours used		33

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 110% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?

Answer 1

Answer :-

1)Predetermined overhead rate = Total manufacturing overhead / Total machine-hours

Total machine-hours = 155,000 MHs

Total manufacturing overhead = Fixed Manufacturing overhead cost + Variable Manufacturing overhead cost

Fixed Manufacturing overhead cost = $651,000

Variable manufacturing overhead cost = variable manufacturing overhead cost per machine hours × Machine hours

Variable Manufacturing overhead costs = $4.90 × 155,000

Variable manufacturing overhead cost = $759,500

Total manufacturing overhead cost =$651,000 + $759,500

Total manufacturing overhead cost = $1,410,500

Predetermined overhead rate = $1,410,500 /155,000

Predetermined overhead rate = $9.1 per MHs

2)Total manufacturing cost assigned to Job 400

Particular	​​​​Amount
Direct materials	$390
Direct labor cost	$260
Manufacturing overhead cost (Machines hours used × Predetermined overhead rate) (33 MHs × $ 9.1 per MHs )	$300
Total manufacturing cost	$950

3)The unit product cost for job 400,if job includes 50 units -

Total manufacturing costs = $950

No of unit includes in Job 400 =50 units

Unit Product costs = Total manufacturing costs / No. of units

Unit Product costs = $950 / 50

Unit Product costs = $19 per unit

4)The selling price per unit are as follows -

Particular	Amount
Total manufacturing costs	$950
Add :- Markup (110% of $950)	$1045
Selling price of Job 400	$1995
No. of Unit included in Job 400	50 units
Selling price per unit (selling price /No. Of unit of Job 400)	$39.9