Coates Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours.The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $249,000, variable manufacturing overhead of $3.80 per machine-hour, and 30,000 machine-hours.The company has provided the following data concerning Job X784 which was recently completed: If the company marks up its unit product costs by 30% then the selling price for a unit in Job X784 is closest to:
A)$253.87
B)$233.87
C)$53.97
D)$155.22

Question

Coates Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours.The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $249,000, variable manufacturing overhead of $3.80 per machine-hour, and 30,000 machine-hours.The company has provided the following data concerning Job X784 which was recently completed:  If the company marks up its unit product costs by 30% then the selling price for a unit in Job X784 is closest to:
A)$253.87 
B)$233.87 
C)$53.97 
D)$155.22

Quizplus · Accepted Answer

First, we need to calculate the total manufacturing cost for Job X784 using the predetermined overhead rate:

Direct Materials = $3,780
Direct Labor = $6,000
Variable Manufacturing Overhead = $1,140 ($3.80 per machine-hour x 300 machine-hours)
Fixed Manufacturing Overhead = $8,300 ($249,000 / 30,000 machine-hours x 300 machine-hours)

Total Manufacturing Cost = $19,220

Next, we need to add a 30% markup to the total manufacturing cost to find the selling price:

Selling Price = $19,220 x 1.30 = $24,946

Since Job X784 produced 100 units, the selling price per unit would be:

Selling Price Per Unit = $24,946 / 100 = $249.46

Therefore, the closest answer choice is B) $233.87 Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base)= $249,000 + ($3.80 per machine-hour × 30,000 machine-hours)= $249,000 + $114,000 = $363,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $363,000 ÷ 30,000 machine-hours = $12.10 per machine-hour
Overhead applied to a particular job = Predetermined overhead rate x Amount of the allocation base incurred by the job = $12.10 per machine-hour × 250 machine-hours = $3,025 11ea7998_5f5a_fdd4_911b_afd9b6961e95_TB2627_00_TB2627_00 11ea7998_5f5b_24e5_911b_8f7b229fd470_TB2627_00_TB2627_00 11ea7998_5f5b_24e6_911b_8bc0e7186287_TB2627_00_TB2627_00

Coates Corporation Uses a Job-Order Costing System with a Single