Markup on job cost 75%

Department

Milling Assembly

Machine-hours 60,000 3,000

Direct labor-hours 8,000 80,000

Total fixed manufact$ 390,000 $500,000

uring overhead cost

Variable manufacturing overhead per machine-hour $2.00

Variable manufacturing overhead per direct labor-hour $3.75

Cost summary for Job 407 Department

Milling Assembly

Machine-hours 90 4

Direct labor-hours 5 20

Direct materials $800 $370

Direct labor cost $70 $280

Enter a formula into each of the cells marked with a? below

Step 1: Calculate the estimated total manufacturing overhead cost for each department

Step 2: Calculate the predetermined overhead rate in each department

Step 3: Calculate the amount of overhead applied from both departments to Job 407

Step 4: Calculate the total job cost for Job 407

Total cost of Job 407

Step 5: Calculate the selling price for Job 407

Instructions are below.

Explanation:

Giving the following information:

Markup on job cost 75%

Milling Assembly

Machine-hours 60,000 3,000

Direct labor-hours 8,000 80,000

Total fixed manufacturing overhead cost $ 390,000 $500,000

Variable manufacturing overhead per machine-hour $2.00

Variable manufacturing overhead per direct labor-hour $3.75

Job 407:

Milling Assembly

Machine-hours 90 4

Direct labor-hours 5 20

Direct materials $800 $370

Direct labor cost $70 $280

1) We need to calculate the total overhead costs:

Milling = 390,000 + 2*60,000 + 3.75*8,000 = $540,000

Assembly = 500,000 + 2*3,000 + 3.75*80,000 = $806,000

2) Now, the predetermined overhead rate per department:

Predetermined manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

For Milling we will use machine hours as allocation base:

Milling = 540,000/60,000 = $9 per machine hour

For Assembly, we will use direct labor hours:

Assembly = 806,000/80,000 = $10.075 per direct labor hour

3) We need to allocate overhead to Job 407

Allocated MOH = Estimated manufacturing overhead rate * Actual amount of allocation base

Milling = 9*90 = $810

Assembly = 10.075*20 = $201.5

Total overhead = $1,011.5

4) Total cost = (800 + 370) + (70 + 280) + 1,011.5

Total cost = $2,531.5

5) Finally, the selling price:

Selling price = 2,531.5*1.75 = $4,430.125