Kalp Corporation has two production departments, Customization and Machining. Th
ID: 2329813 • Letter: K
Question
Kalp Corporation has two production departments, Customization and Machining. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Machining department’s predetermined overhead rate is based on machine hours and the Customization department’s predetermined overhead rate is based on direct labor hours. The company has made the following estimates for the two production departments:
Machining Customization
Machine hours 16,000 11,000
Direct labor hours 18,000 6,000
Total fixed manufacturing overhead cost $92,800 $28,800
Variable manufacturing overhead per machine hour $1.20 -
Variable manufacturing overhead per labor hour - $5.00
The following data was recorded for Job 2110:
Machining Customization
Machine hours 50 40
Direct labor hours 60 30
Direct materials $430 $180
Direct labor cost $800 $540
1. What is the predetermined overhead rate for the Customization Department?
2. What is the predetermined overhead rate for the Machining Department?
3. What was the total cost of Job 2110?
4. If the company marks up its manufacturing costs by 40%, then what is the total selling price for Job 2110 (rounded to nearest dollar)?
Explanation / Answer
1 Predetermined overhead rate for the Customization Department = 1.20+(92800/16000)= $7 2 Predetermined overhead rate for the Machining Department = 5+(28800/6000)= $9.8 3 Direct materials 610 =430+180 Direct labor cost 1340 =800+540 Overhead applied 644 =(50*7)+(30*9.8) Total cost of Job 2110 2594 4 Total selling price = 2594+(2594*40%)= $3632
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