Chapter 2: Applying Excel

Data

Markup on job cost 75%

Department

Milling Assembly

Machine-hours 60,000 3,000

Direct labor-hours 8,000 80,000

Total fixed manufacturing overhead cost $300,000 $500,000

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

Milling Assembly

Total fixed manufacturing overhead cost $300,000 $500,000

Variable manufacturing overhead per machine-hour or direct labor-hour $2.00 $3.75

Total machine-hours or direct labor-hours 60,000 80,000

Total variable manufacturing overhead $120,000 $150,000

Total manufacturing overhead $420,000 $650,000

Step 2: Calculate the predetermined overhead rate in each department

Milling Assembly

Total manufacturing overhead $420,000 $800,000

Total machine-hours or direct labor-hours 60,000 80,000

Predetermined overhead rate per machine-hour or direct labor-hour $7.00 $10.00

Step 3: Calculate the amount of overhead applied from both departments to Job 407

Milling Assembly

Predetermined overhead rate per machine-hour or direct labor-hour $7.00 $10.00

Machine-hours or direct labor-hours for the job 90 20

Manufacturing overhead applied $630.00 $200.00

Step 4: Calculate the total job cost for Job 407

Milling Assembly

Direct materials $800.00 $370.00

Direct labor cost $70.00 $280.00

Manufacturing overhead applied $630.00 $200.00

Total cost of Job 407 $1,500.00 $850.00

Step 5: Calculate the selling price for Job 407

Total cost of Job 407

Markup

Selling price of Job 407

2. Change the total fixed manufacturing overhead cost for the Milling Department in Data area back to $390,000, keeping all of the other data the same as in the original example. Consider a new job, Job 408, with the following characteristics:

Chapter 2: Applying Excel

Cost summary for Job 408 Department

Milling Assembly

Machine-hours 90 3

Direct labor-hours 7 40

Direct materials cost $820 $370

Direct labor cost $112 $800

In your worksheet, enter this new data in the cells for Job 407.

What is the new selling price for Job 408? (Round your final answer to 2 decimal places.)

3. Without changing the data for the job from requirement 2 above, what is the selling price for Job 408 if the total number of machine-hours in the Assembly Department increases from 3,000 machine-hours to 5,000 machine-hours? (Round your final answer to 2 decimal places.)

4. Restore the total number of machine-hours in the Assembly Department to 3,000 machine-hours. And keep the job data the same as it was in Requirement 2. What is the selling price for Job 408 if the total number of direct labor-hours in the Assembly Department decreases from 80,000 direct labor-hours to 40,000 direct labor-hours? (Round your final answer to 2 decimal places.)