Columbo Corporation has two production departments, Forming and Finishing. The c
ID: 2414860 • Letter: C
Question
Columbo 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: Machine-hours Direct labor-hours Total fixed manufacturing overhead cost variable manufacturing overhead per machine-hour Variable manufacturing overhead per direct labor- hour Forming Finishing 10,000 9,000 $110,500 78,300 17,000 1,000 1.60 $ 3.30 During the current month the company started and finished Job A948. The following data were recorded for this job: Job A948: Machine-hours Direct labor-hours Direct materials Direct labor cost Forming Finishing 30 50 $650 330 $380 $1,900 70 10 If the company marks up its manufacturing costs by 40% then the selling price for Job A948 would be closest to: Round vour intermediate calculations to 2 decimal places.)Explanation / Answer
Pre-determined OH rate: Forming: Fixed (110500/17000) 6.5 Variable 1.6 Total OH rate per MH 8.1 Finishing: Fixed (78300/9000) 8.7 Variable 3.3 Total OH rate per DLH 12 Selling price of Job A948 Material (650+330): 980 Labour (380+1900): 2280 Oh applied: Forming (70*8.10) 567 Finishing (50*12) 600 Total cost of Job 4427 Add: Markup @ 40% 1770.8 Selling price of Job A948 6197.8 Answer is $ 6197.80