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		156,000
Fixed manufacturing overhead cost	$	658,000
Variable manufacturing overhead cost per machine-hour	$	4.60

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	$	380
Direct labor cost	$	290
Machine-hours used		35

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?

Answer 1

1)
	Predetermined fixed overhead rate = Total overhead/number of hours
	=$658000/156000 hours
	=$4.22 per hour
	Plantwide predetermined overhead rate = fixed overhead rate + variable overhead rate
	=$4.22+4.60
	=$8.82 per machine hour		(rounded off up to 2 decimal point)
2)	manufacturing cost assigned to Job 400
	Direct Materials	380.000
	direct labor cost	290.000
	overhead cost	308.700
	($8.82*35)
	Total	$ 978.70
3)	Unit cost
	=total cost of job/ number of units per job
	=$978.70/60
	=$16.31 ( rounded off up to 2 decimal points)
4)	Selling price per unit
	=Cost + mark up
	=$16.31+120%
	=$19.57
Note: If the answers are wrong, it may be due to rounding off. Let me know questions rounding off requirement
so that I can revise the answer.