Asked by Jaqueline Martinez on Jul 03, 2024
Verified
Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments.Further assume that the company uses a markup of 50% on manufacturing cost to establish selling prices.The calculated selling price for Job M is closest to:
A) $15,310
B) $47,767
C) $30,620
D) $45,930
Departmental Predetermined Overhead Rates
The overhead rates set for specific departments within a company, based on estimated costs and activity levels.
Manufacturing Cost
The total expense incurred in the process of producing a product, including raw materials, labor, and overhead.
Selling Price
The price at which a product or service is offered to consumers.
- Determine the sales price of goods by incorporating a markup into the cost per unit of products.
- Distinguish between the use of plantwide and departmental predetermined overhead rates.
Verified Answer
BS
Barrington SaintJul 08, 2024
Final Answer :
D
Explanation :
Casting Department predetermined overhead rate: Finishing Department predetermined overhead rate: Manufacturing overhead applied to Job M: The selling price for Job M would be calculated as follows: Reference: CH02-Ref28
Hickingbottom Corporation has two production departments, Forming and Finishing.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 Finishing 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 M381.The following data were recorded for this job:
Hickingbottom Corporation has two production departments, Forming and Finishing.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 Finishing 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 M381.The following data were recorded for this job:
Learning Objectives
- Determine the sales price of goods by incorporating a markup into the cost per unit of products.
- Distinguish between the use of plantwide and departmental predetermined overhead rates.
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