Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

Moody Corporation uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:

Machine-hours required to support estimated production		160,000
Fixed manufacturing overhead cost	$	652,000
Variable manufacturing overhead cost per machine-hour	$	4.90

Required:
1. Compute the plantwide predetermined overhead rate.
2. During the year, Job 400 was started and completed. The following information was available with respect to this job:

Direct materials	$	360
Direct labor cost	$	240
Machine-hours used		40

Compute the total manufacturing cost assigned to Job 400.
3. If Job 400 includes 50 units, what is the unit product cost for this job?
4. If Moody uses a markup percentage of 130% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?

Compute the plantwide predetermined overhead rate.
 

Explanation

The estimated total manufacturing overhead cost is computed as follows:

Y = $652,000 + ($4.90 per MH)(160,000 MHs)

Estimated fixed manufacturing overhead	$	652,000
Estimated variable manufacturing overhead: $4.90 per MH × 160,000 MHs		784,000
Estimated total manufacturing overhead cost	$	1,436,000

The plantwide predetermined overhead rate is computed as follows:

Estimated total manufacturing overhead (a)	$	1,436,000
Estimated total machine-hours (b)		160,000	MHs
Predetermined overhead rate (a) ÷ (b)	$	8.98	per MH

Compute the total manufacturing cost assigned to Job 400.



Explanation
Total manufacturing cost assigned to Job 400:

Direct materials	$	360
Direct labor		240
Manufacturing overhead applied ($8.98 per MH × 40 MHs)		359
Total manufacturing cost	$	959

 If Job 400 includes 50 units, what is the unit product cost for this job?
 
 Explanation
The unit product cost of Job 400 is computed as follows:

Total manufacturing cost (a)	$	959
Number of units in the job (b)		50
Unit product cost (a) ÷ (b)	$	19

If Moody uses a markup percentage of 130% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?
 

Explanation
The selling price per unit is computed as follows:

Total manufacturing cost	$	959
Markup (130% of manufacturing cost)		1,247
Selling price for Job 400 (a)	$	2,206
Number of units in Job 400 (b)		50
Selling price per unit (a) ÷ (b)	$	44