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 3AE
To determine
Selling price: The cost incurred by selling the product in the market is known as the selling price.
Determine the selling price of Job 408 when the machine hours in Assembly department are changed from 3000 to 6000.
Expert Solution & Answer
Answer to Problem 3AE
Solution: When the machine hours in assembly department are changed from 3000 to 6000 the selling price of the job 408 remains same.
Explanation of Solution
This calculation is done in the workbook and it is explained below,
| Chapter 2: Applying Excel | |||
| Data | |||
| Mark-up on |
75% | ||
| Department | |||
| Milling | Assembly | ||
| 1 | Machine hours | 60000 | 6000 |
| 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 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
The selling price of the Job 408 remains the same since machine hours of assembly department are not considered in the calculation because the job is done manually. Hence, Direct Labor hours in the said department are considered for calculation.
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Chapter 3 Solutions
Connect 1-Semester Access Card for Managerial Accounting
Ch. 3.A - Prob. 1ECh. 3.A - Prob. 2ECh. 3.A - Prob. 3ECh. 3.A - PROBLEM 3A-4 Activity-Based Absorption Costing as...Ch. 3.A - Prob. 5PCh. 3.A - CASE 3A-6 Activity-Based Absorption Costing and...Ch. 3.B - Prob. 1ECh. 3.B - Prob. 2ECh. 3.B - Prob. 3PCh. 3.B - Prob. 4C
Ch. 3 - Prob. 1QCh. 3 - Prob. 2QCh. 3 - Prob. 3QCh. 3 - Prob. 4QCh. 3 - Prob. 5QCh. 3 - Prob. 6QCh. 3 - Prob. 7QCh. 3 - Prob. 8QCh. 3 - 3-9 What is underapplied overhead? Overapplied...Ch. 3 - Prob. 10QCh. 3 - Prob. 11QCh. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - This Excel worksheet relates to the Dickson...Ch. 3 - This Excel worksheet relates to the Dickson...Ch. 3 - Prob. 3AECh. 3 - This Excel worksheet relates to the Dickson...Ch. 3 - Prob. 1F15Ch. 3 - Prob. 2F15Ch. 3 - Prob. 3F15Ch. 3 - Prob. 4F15Ch. 3 - Prob. 5F15Ch. 3 - Prob. 6F15Ch. 3 - Prob. 7F15Ch. 3 - Prob. 8F15Ch. 3 - Prob. 9F15Ch. 3 - Prob. 10F15Ch. 3 - Prob. 11F15Ch. 3 - Prob. 12F15Ch. 3 - Prob. 13F15Ch. 3 - Prob. 14F15Ch. 3 - Prob. 15F15Ch. 3 - Prob. 1ECh. 3 - Prob. 2ECh. 3 - Prob. 3ECh. 3 - EXERCISE 24 Computing Total Job Costs and Unit...Ch. 3 - EXERCISE 2-5 Computing Total Job Costs and Unit...Ch. 3 - Prob. 6ECh. 3 - EXERCISE 2-7 Job-Order Costing; Working Backwards...Ch. 3 - Prob. 8ECh. 3 - EXERCISE 3-9 Journal Entries and T-accounts...Ch. 3 - Prob. 10ECh. 3 - Prob. 11ECh. 3 - Prob. 12ECh. 3 - Prob. 13ECh. 3 - Prob. 14ECh. 3 - Prob. 15ECh. 3 - Prob. 16ECh. 3 - Prob. 17ECh. 3 - Prob. 18ECh. 3 - Prob. 19ECh. 3 - EXERCISE 2—13 Departmental Predetermined Overhead...Ch. 3 - EXERCISE 214 Job-Orders Costing for a Service...Ch. 3 - Prob. 22PCh. 3 - PROBLEM 2—16 Plantwide Predetermined Overhead...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - PROBLEM 2-21 Plant wide Versus Multiple...Ch. 3 - CASE 2-22 Plantwide versus Departmental Overhead...Ch. 3 - Prob. 30C
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