Markup on job cost 75% Department
Milling Assembly
Machine-hours 60,000 3,000
Direct labor-hours 8,000 80,000
Total fixed manufact$ 390,000 $500,000
uring overhead cost
Variable manufacturing overhead per machine-hour $2.00
Variable manufacturing overhead per direct labor-hour $3.75
Cost summary for Job 407 Department
Milling Assembly
Machine-hours 90 4
Direct labor-hours 5 20
Direct materials $800 $370
Direct labor cost $70 $280
Enter a formula into each of the cells marked with a ? below
Step 1: Calculate the estimated total manufacturing overhead cost for each department
Step 2: Calculate the predetermined overhead rate in each department
Step 3: Calculate the amount of overhead applied from both departments to Job 407
Step 4: Calculate the total job cost for Job 407
Total cost of Job 407
Step 5: Calculate the selling price for Job 407

Instructions are below.

Explanation:

Giving the following information:

Markup on job cost 75%

Milling Assembly

Machine-hours 60,000 3,000

Direct labor-hours 8,000 80,000

Total fixed manufacturing overhead cost $ 390,000 $500,000

Variable manufacturing overhead per machine-hour $2.00

Variable manufacturing overhead per direct labor-hour $3.75

Job 407:

Milling Assembly

Machine-hours 90 4

Direct labor-hours 5 20

Direct materials $800 $370

Direct labor cost $70 $280

1) We need to calculate the total overhead costs:

Milling= 390,000 + 2*60,000 + 3.75*8,000= $540,000

Assembly= 500,000 + 2*3,000 + 3.75*80,000= $806,000

2) Now, the predetermined overhead rate per department:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

For Milling we will use machine hours as allocation base:

Milling= 540,000/60,000= $9 per machine hour

For Assembly, we will use direct labor hours:

Assembly= 806,000/80,000= $10.075 per direct labor hour

3) We need to allocate overhead to Job 407

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Milling= 9*90= $810

Assembly= 10.075*20= $201.5

Total overhead= $1,011.5

4) Total cost= (800 + 370) + (70 + 280) + 1,011.5

Total cost= $2,531.5

5) Finally, the selling price:

Selling price= 2,531.5*1.75= $4,430.125