Homework SourseTancredi Corporation has two manufacturing departmentsMachin
Tancredi 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 E 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. If both jobs are sold during the month, the company\'s cost of goods sold for the month would be closest to:
A. $102,600
B. $110,808
C. $41,150
D. $61,450
| Molding | Customizing | Total | ||||
| Estimated total machine-hours (MHs) | 5,000 | 5,000 | 10,000 | |||
| Estimated total fixed manufacturing overhead cost | $ | 22,000 | $ | 11,500 | $ | 33,500 |
| Estimated variable manufacturing overhead cost per MH | $ | 1.80 | $ | 3.00 |
Solution
A.$102,600.
first let us calculate the predetermined overhead rate:
now,
cost of goods sold:
| total fixed manufacturing cost | $33,500 |
| total variable manufacturing cost ($1.80*5,000) +(3*5,000) | 24,000 |
| total manufacturing overhead | $57,500 |
| number of machine hours | 10,000 |
| predetermined overhead rate ($57,500 / 10,000) | $5.75 |
