Kluth Corporation has two manufacturing departments-Molding and Customizing. The
ID: 2331442 • Letter: K
Question
Kluth Corporation has two manufacturing departments-Molding and Customizing. The company used the following data at the beginning of the year to calculate predetermined overhead rates Molding Customizing Total Estimated total machine-hours (MHs) Estimated total fixed manufacturing overhead cost Estimated variable manufacturing overhead cost per MH 11,000 $38,500 $ 3.00 3,700 14,700 $14,430 $52,930 $ 5.00 During the most recent month, the company started and completed two jobs--Job C and Job M. There were no beginning inventories Data concerning those two jobs follow Direct materials Direct labor cost Molding machine-hou Customizing machine-hours Job C Job M $16,800 $10,100 $23,500 $10,400 2,500 8,500 2,700 1,000 Required Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in botlh production departments. Further assume that the company uses a markup of 20% on manufacturing cost to establish selling prices Calculate the selling prices for Job C and for Job M. (Do not round intermediate calculations.) Selling price for Job C Selling price for Job MExplanation / Answer
Molding Department predetermined overhead rate:
Estimated fixed manufacturing overhead.............. $38,500 Estimated variable manufacturing overhead ($3.00 per MH × 11,000MHs)............... 33,000
Estimated total manufacturing overhead cost (a)....... $71,500 Estimated total machine-hours (b)............ ....... ......... 11,000
Molding Departmental predetermined overhead rate (a) ÷ (b)........................ $6.50
Customizing Department predetermined overhead rate:
Estimated fixed manufacturing overhead....... $14,430
Estimated variable manufacturing overhead ($5.00 per MH × 3,700 MHs).............. 18,500
Estimated total manufacturing overhead cost (a)..... $32,930
Estimated total machine-hours (b)............. .. 3,700
Customizing Departmental predetermined overhead rate (a) ÷ (b)................ $8.90
Manufacturing overhead applied to Job C:
Molding ($6.50 per MH × 2,500 MHs).......... $16,250
Customizing ($8.90 per MH × 2,700 MHs)........ 24030
Total manufacturing overhead applied............. $40280
Manufacturing overhead applied to Job M:
Molding ($6.50 per MH × 8500 MHs).........$55250
Customizing ($8.90 per MH × 1,000 MHs)..... 8,900
Total manufacturing overhead applied..........$64150
The selling price for Job C would be calculated as follows:
Direct materials................................ ..... .. 16,800
Direct labor cost................................. ......... 23,500
Manufacturing overhead applied................. 40280
Total manufacturing cost.............................$80580
Markup (20%)................................................16,116
Selling price............................................. $96,696
The selling price for Job M would be calculated as follows:
Direct materials...................... ...... $10100
Direct labor cost.....…................. 10400
Manufacturing overhead applied..... 64150
Total manufacturing cost...........$84650
Markup (20%)..............................16,930
Selling price................. .............. $101,580
Therefore,
Selling price for Job C 96696 Selling price for Job M 101580Related Questions
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