Koelsch 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: During the most recent month, the company started and completed two jobs--Job F and Job K.There were no beginning inventories.Data concerning those two jobs follow: Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 50% on manufacturing cost to establish selling prices.The calculated selling price for Job K is closest to:
A)$72,561
B)$79,817
C)$24,187
D)$48,374

Question

Koelsch 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:  During the most recent month, the company started and completed two jobs--Job F and Job K.There were no beginning inventories.Data concerning those two jobs follow:  Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 50% on manufacturing cost to establish selling prices.The calculated selling price for Job K is closest to:
A)$72,561 
B)$79,817 
C)$24,187 
D)$48,374

Quizplus · Accepted Answer

The first step is to calculate the estimated total overhead costs in the two departments.
Molding 11ea7998_5f54_bc21_911b_e7eac5d8c830_TB2627_00_TB2627_00 Customizing 11ea7998_5f54_e332_911b_7ba612fb5885_TB2627_00_TB2627_00 The second step is to combine the estimated manufacturing overhead costs in the two departments ($6,000 + $52,200 = $58,200)to calculate the plantwide predetermined overhead rate as follow: 11ea7998_5f55_0a43_911b_f336571dc3ed_TB2627_00_TB2627_00 The overhead applied to Job K is calculated as follows:
Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job
= $5.82 per MH x (300 MHs + 5,400 MHs)
= $5.82 per MH x (5,700 MHs)
= $33,174
Job K's manufacturing cost: 11ea7998_5f55_3154_911b_a925aa5d9d91_TB2627_00_TB2627_00 The selling price for Job K: 11ea7998_5f55_3155_911b_d130d9766f1f_TB2627_00_TB2627_00

Koelsch Corporation Has Two Manufacturing Departments--Molding and Customizing