Explanation 3: A textile company which uses job-order costing system has 2 production department. These are cutting department and sewing department. The company computes a predetermined overhead rate in each department. The predetermined overhead rate in cutting department is based on machine-hours. The predetermined overhead rate in sewing department is based on direct labor hours. The company made the estimates that can be shown in first table at the beginning of the production period. The company uses cost-plus pricing (a markup percentage of %75 of total manufacturing cost) to establish selling prices for all of its jobs. Question 3: During the current month the company started and completed Job 130. The direct costs related to Job 130 and also the machine hours and direct labor hours worked to produce Job 130 are shown in the second table. By using the amounts determined in two tables, calculate the manufacturing cost of Job 130. Then, calculate the selling price of Job 130 by taking into account a markup percentage of %75 of total manufacturing cost. Machine hours Cutting Department 60.000 machine hours 8.000 direct labor hours $390.000 $2 Sewing Department 3.000 machine hours 80.000 direct labor hours $500.000 Direct labor hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine hours Variable manufacturing overhead per direct labor hours $3,75 Machine hours Direct labor hours Direct material Direct labor cost Cutting Department 90 machine hours 5 direct labor hours $800 $70 Sewing Department 4 machine hours 20 direct labor hours $370 $280