Janicki Corporation has two manufacturing departments--Machining 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 A and Job J. 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 J is closest to:
A) $71,983
B) $65,439
C) $43,626
D) $21,813

Question

Janicki Corporation has two manufacturing departments--Machining 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 A and Job J. 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 J is closest to:
A) $71,983 
B) $65,439 
C) $43,626 
D) $21,813

Quizplus · Accepted Answer

The first step is to calculate the estimated total overhead costs in the two departments.
Machining
 11ea7761_1950_f341_81a5_3f1a1c7b7f3a_TB2580_00 Customizing
 11ea7761_1951_1a52_81a5_55f366ae6f41_TB2580_00 The second step is to combine the estimated manufacturing overhead costs in the two departments ($5,900 + $45,900 = $51,800) to calculate the plantwide predetermined overhead rate as follow:
 11ea7761_1951_1a53_81a5_c9cdb08fc636_TB2580_00 The overhead applied to Job J is calculated as follows:
Overhead applied to a particular job = Predetermined overhead rate x Machine-hours incurred by the job
= $5.18 per MH x (300 MHs + 5,400 MHs)
= $5.18 per MH x (5,700 MHs)
= $29,526
Job J's manufacturing cost:
 11ea7761_1951_1a54_81a5_a1819eff4fcf_TB2580_00 The selling price for Job J:
 11ea7761_1951_1a55_81a5_937f06756219_TB2580_00

Janicki Corporation Has Two Manufacturing Departments--Machining and Customizing