Connect 1-Semester Access Card for Managerial Accounting
15th Edition
ISBN: 9780077522858
Author: Ray H Garrison, Eric Noreen, Peter C. Brewer Professor
Publisher: McGraw-Hill Education
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Question
Chapter 3, Problem 2AE
To determine
Selling price: The cost incurred by selling the product in the market is known as the selling price.
Determine the missing figures in the sheet. After finding the missing figures determine the selling price of Job 408 by replacing the current data with the data given in the question.
Expert Solution & Answer
Answer to Problem 2AE
Solution: The selling price of Job 408 using current data is $4348.75 and the selling price of Job 408 after replacing the current data with the given data is $2800.
Explanation of Solution
This calculation is done in the workbook and it is explained below,
Part -1- The missing figures in the sheet is determined here.
| Chapter 2: Applying Excel | |||
| Data | |||
| Mark-up on |
75% | ||
| Department | |||
| Milling | Assembly | ||
| 1 | Machine hours | 60000 | 3000 |
| 2 | Direct Labour Hours | 8000 | 80000 |
| 3 | Total fixed |
$3,90,000.00 | $5,00,000.00 |
| 4 | Variable manufacturing overhead per machine hour | $2.00 | $ - |
| 5 | Variable manufacturing overhead per direct labour hour | $ - | $ 3.75 |
| Cost Summary for job 407 | Department | ||
| Milling | Assembly | ||
| 6 | Machine hours | 90 | 4 |
| 7 | Direct Labour Hours | 5 | 20 |
| 8 | Direct Materials | $800.00 | $370.00 |
| 9 | Direct Labour cost | $70.00 | $280.00 |
| Enter a formula into each of the cells marked with? below | |||
| Step 1: Calculate the estimated total manufacturing overhead cost for each department | |||
| Milling | Assembly | ||
| 10 | Total fixed manufacturing overhead (given) | $3,90,000.00 | $5,00,000.00 |
| 11 | Variable manufacturing overhead per machine hour or direct labour hour (given) | $2.00 | $3.75 |
| 12 | Total machine hours or direct labour hours (given) | 60000 | 80000 |
| 13 | Total Variable manufacturing overhead (11 x 12) | $1,20,000.00 | $3,00,000.00 |
| 14 | Total manufacturing overhead (10 + 13) | $5,10,000.00 | $8,00,000.00 |
| Step 2: Calculate the pre-determined overhead rate in each department | |||
| Milling | Assembly | ||
| 15 | Total manufacturing overhead (14) | $5,10,000.00 | $8,00,000.00 |
| 16 | Total machine hours or direct labour hours (given) | 60000 | 80000 |
| 17 | Pre-determined overhead rate per machine hour or direct labour hour (15 divided by 16) | $8.50 | $10.00 |
| Step 3: Calculate the amount of overhead applied to both departments to Job 407 | |||
| Milling | Assembly | ||
| 18 | Pre-determined overhead rate per machine hour or direct labour hour (17) | $8.50 | $10.00 |
| 19 | Machine hours or direct labour hours for the job (given) | 90 | 20 |
| 20 | Manufacturing overhead applied (18 x 19) | $765.00 | $200.00 |
| Step 4: Calculate the total job cost for Job 407 | |||
| Milling | Assembly | ||
| 21 | Direct Materials (given) | $800.00 | $370.00 |
| 22 | Direct Labour cost (given) | $70.00 | $280.00 |
| 23 | Manufacturing overhead applied (20) | $765.00 | $200.00 |
| 24 | Total cost of Job 407 (21 + 22 + 23) | $1,635.00 | $850.00 |
| Total cost of Job 407 (Milling + Assembly) | $2,485.00 | ||
| Step 5: Calculate the selling price for Job 407 | |||
| Milling | Assembly | ||
| 25 | Total cost of Job 407 ( 24) | $1,635.00 | $850.00 |
| 26 | Mark-up (24 x 75%) | $1,226.25 | $637.50 |
| 27 | Selling price of Job 407 (25 + 26) | $2,861.25 | $1,487.50 |
| Total Selling Price (Milling + Assembly) | $4,348.75 | ||
Part 2 - The selling price of Job 408 by replacing the current data with data given
| Chapter 2: Applying Excel | |||
| Data | |||
| Mark-up on job cost | 75% | ||
| Department | |||
| Milling | Assembly | ||
| 1 | Machine hours | 60000 | 3000 |
| 2 | Direct Labour Hours | 8000 | 80000 |
| 3 | Total fixed manufacturing overhead cost | $3,90,000.00 | $5,00,000.00 |
| 4 | Variable manufacturing overhead per machine hour | $2.00 | $ - |
| 5 | Variable manufacturing overhead per direct labour hour | $ - | $3.75 |
| Cost Summary for job 408 | Department | ||
| Milling | Assembly | ||
| 6 | Machine hours | 40 | 10 |
| 7 | Direct Labour Hours | 2 | 6 |
| 8 | Direct Materials | $700.00 | $360.00 |
| 9 | Direct Labour cost | $50.00 | $150.00 |
| Enter a formula into each of the cells marked with? Below | |||
| Step 1: Calculate the estimated total manufacturing overhead cost for each department | |||
| Milling | Assembly | ||
| 10 | Total fixed manufacturing overhead (given) | $3,00,000.00 | $5,00,000.00 |
| 11 | Variable manufacturing overhead per machine hour or direct labour hour (given) | $2.00 | $3.75 |
| 12 | Total machine hours or direct labour hours (given) | 60000 | 80000 |
| 13 | Total Variable manufacturing overhead (11 x 12) | $1,20,000.00 | $3,00,000.00 |
| 14 | Total manufacturing overhead (10 + 13) | $4,20,000.00 | $8,00,000.00 |
| Step 2: Calculate the pre-determined overhead rate in each department | |||
| Milling | Assembly | ||
| 15 | Total manufacturing overhead (14) | $4,20,000.00 | $8,00,000.00 |
| 16 | Total machine hours or direct labour hours (given) | 60000 | 80000 |
| 17 | Pre-determined overhead rate per machine hour or direct labour hour (15 divided by 16) | $7.00 | $10.00 |
| Step 3: Calculate the amount of overhead applied to both departments to Job 408 | |||
| Milling | Assembly | ||
| 18 | Pre-determined overhead rate per machine hour or direct labour hour (17) | $7.00 | $10.00 |
| 19 | Machine hours or direct labour hours for the job (given) | 40 | 6 |
| 20 | Manufacturing overhead applied (18 x 19) | $280.00 | $60.00 |
| Step 4: Calculate the total job cost for Job 408 | |||
| Milling | Assembly | ||
| 21 | Direct Materials (given) | $700.00 | $360.00 |
| 22 | Direct Labour cost (given) | $50.00 | $150.00 |
| 23 | Manufacturing overhead applied (20) | $280.00 | $60.00 |
| 24 | Total cost of Job 407 (21 + 22 + 23) | $1,030.00 | $570.00 |
| Total cost of Job 407 (Milling + Assembly) | $1,600.00 | ||
| Step 5: Calculate the selling price for Job 408 | |||
| Milling | Assembly | ||
| 25 | Total cost of Job 407 ( 24) | $1,030.00 | $570.00 |
| 26 | Mark-up (24 x 75%) | $772.50 | $427.50 |
| 27 | Selling price of Job 407 (25 + 26 ) | $1,802.50 | $997.50 |
| 28 | Total Selling Price of Job 408 (Milling + Assembly) | $2,800.00 | |
Conclusion
Thus, the selling price of Job 408 after replacing the current data with the given data is $2800.
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Chapter 3 Solutions
Connect 1-Semester Access Card for Managerial Accounting
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