Question
Opunui Corporation has two manufacturing departments--Molding and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:
Opunui Corporation has two manufacturing departments--Molding and Finishing. The company used the following data at the beginning of the year to calculate predetermined overhead rates:
Molding Finishing Total
Estimated total machine-hours (MHs) 6,500 3,500 10,000
Estimated total fixed manufacturing overhead cost $ 16,000 $ 4,100 $ 20,100
Estimated variable manufacturing overhead cost per MH $ 1.00 $ 2.00
During the most recent month, the company started and completed two jobs--Job A and Job M. There were no beginning inventories. Data concerning those two jobs follow:
Job A Job M
Direct materials $ 15,300 $ 9,000
Direct labor cost $ 22,200 $ 8,900
Molding machine-hours 2,500 4,000
Finishing machine-hours 2,500 1,000
Assume that the company uses a plantwide predetermined manufacturing overhead rate based on machine-hours and uses a markup of 30% on manufacturing cost to establish selling prices. The calculated selling price for Job A is closest to:
A)$54,300 B)$70,590 C)$87,900 D)$16,290
Please explain correct answer.
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