Asked by Dangerously Loved on May 29, 2024
Verified
Amason Corporation has two production departments, Forming and Assembly.The company uses a job-order costing system and computes a predetermined overhead rate in each production department.The Forming Department's predetermined overhead rate is based on machine-hours and the Assembly Department's predetermined overhead rate is based on direct labor-hours.At the beginning of the current year, the company had made the following estimates: During the current month the company started and finished Job A950.The following data were recorded for this job: Required:
Calculate the selling price for Job A950 if the company marks up its unit product costs by 30% to determine selling prices.
Predetermined Overhead Rate
An estimated overhead rate used to apply manufacturing overhead to products, calculated before the accounting period begins.
Direct Labor-Hours
The total hours worked by employees directly involved in the manufacturing process, used as a basis for allocating overhead costs.
Machine-Hours
A measure of the amount of time machines are operated during the production process, used for allocating costs or measuring productivity.
- Calculate the retail price of assignments using markup percentages.
Verified Answer
Forming Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per machine-hour × Total machine-hours in the department)
= $102,400 + ($1.90 per machine-hour × 16,000 machine-hours)
= $102,400 +$30,400 = $132,800
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $132,800 ÷ 16,000 machine-hours = $8.30 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $8.30 per machine-hour × 50 machine-hours = $415
Assembly Department:
Assembly Department overhead cost = Fixed manufacturing overhead cost + (Variable overhead cost per direct labor-hour × Total direct labor-hours in the department)
= $66,000 + ($3.80 per direct labor-hour × 6,000 direct labor-hours)
= $66,000 + $22,800 = $88,800
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the = $88,800 ÷6,000 direct labor-hours = $14.80 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $14.80 per direct labor-hour × 40 direct labor-hours = $592
Overhead applied to Job A950
Learning Objectives
- Calculate the retail price of assignments using markup percentages.
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