Columbo Corporation has two production departments, Forming and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production
Columbo Corporation has two production departments, Forming and Finishing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming Department's predetermined overhead rate is based on machine-hours and the Finishing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates:
Forming Finishing Machine-hours 17,000 10,000 Direct labor-hours 1,000 9,000 Total fixed manufacturing overhead cost $ 110,500 $ 78,300 Variable manufacturing overhead per machine-hour $ 1.60 Variable manufacturing overhead per machine-hour $ 3.30
During the current month the company started and finished Job A948. The following data were recorded for this job:
Job A948: Forming Finishing Machine-hours 70 30 Direct labor-hours 10 50 Direct materials $ 650 $ 330 Direct labor cost $ 380 $ 1,900
If the company marks up its manufacturing costs by 40% then the selling price for Job A948 would be closest to: $6,197.80 $4,427.00 $1,770.80 $6,818.00
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