Asked by Angelique Cobilla on May 04, 2024
Verified
Cull 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 $462,000, variable manufacturing overhead of $2.20 per machine-hour, and 60,000 machine-hours. The company has provided the following data concerning Job X455 which was recently completed: If the company marks up its unit product costs by 20% then the selling price for a unit in Job X455 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $258.32
B) $190.80
C) $39.72
D) $238.32
Selling Price
The amount of money a customer pays for a particular product or service.
Unit Product Costs
The total cost associated with producing one unit of a product, including direct materials, direct labor, and overhead.
Markup
The amount added to the cost of goods to determine their selling price, typically expressed as a percentage of the cost.
- Ascertain retail prices through the evaluation of unit expenses and markup ratios.
Verified Answer
IR
Ibzan RamirezMay 08, 2024
Final Answer :
D
Explanation :
First, we need to calculate the total manufacturing cost for Job X455:
Direct materials cost = $32,000
Direct labor cost = $35,000
Manufacturing overhead cost = predetermined overhead rate x actual machine-hours used
Manufacturing overhead cost = $3.20 per machine-hour x 12,500 machine-hours
Manufacturing overhead cost = $40,000
Total manufacturing cost = $32,000 + $35,000 + $40,000
Total manufacturing cost = $107,000
To obtain the selling price, we need to mark up the unit product cost by 20%:
Selling price = Unit product cost + 20% of unit product cost
Selling price = $107,000/5,000 units + 20% of $107,000/5,000 units
Selling price = $21.40 + $4.28
Selling price = $25.68
Therefore, the selling price for a unit in Job X455 is closest to $238.32 (rounded to the nearest cent). The answer is D.
Direct materials cost = $32,000
Direct labor cost = $35,000
Manufacturing overhead cost = predetermined overhead rate x actual machine-hours used
Manufacturing overhead cost = $3.20 per machine-hour x 12,500 machine-hours
Manufacturing overhead cost = $40,000
Total manufacturing cost = $32,000 + $35,000 + $40,000
Total manufacturing cost = $107,000
To obtain the selling price, we need to mark up the unit product cost by 20%:
Selling price = Unit product cost + 20% of unit product cost
Selling price = $107,000/5,000 units + 20% of $107,000/5,000 units
Selling price = $21.40 + $4.28
Selling price = $25.68
Therefore, the selling price for a unit in Job X455 is closest to $238.32 (rounded to the nearest cent). The answer is D.
Learning Objectives
- Ascertain retail prices through the evaluation of unit expenses and markup ratios.
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