Chapter 2: Applying Excel: Exercise (Part 2 of 2)

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:

EXHIBIT 2 5 Dickson Company: An Example Using Multiple Predetermined Overhead Rates

Step 1: Calculate the estimated total manufacturing overhead cost for each department.

Milling Department Overhead Cost (Y)= $390,000 + ($2.00 per MH 60,000 MHs) = $390,000 + $120,000 = $510,000

Assembly Department Overhead Cost (Y) = $500,000 + ($3.75 per DLH 80,000 DLHs) = $500,000 + $300,000 = $800,000

Step 2: Calculate the predetermined overhead rate in each department.

Milling Department Overhead Rate = $510,000/60,000 machine-hours = $8.50 per machine-hour

Assembly Department Overhead Rate = $800,000/80,000 direct labor-hours = $10.00 per direct labor-hour

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

Milling Department: Overhead Applied to Job 407 = $8.50 per MH 90 MHs = $765

Assembly Department: Overhead Applied to Job 407 = $10.00 per DLH 20 DLHs = $200

Step 4: Calculate the total job cost for Job 407.

	Milling	Assembly	Total
Direct materials	$ 800	$ 370	$ 1,170
Direct labor	$ 70	$ 280	350
Manufacturing overhead applied	$ 765	$ 200	965
Total cost of Job 407			$ 2,485

Step 5: Calculate the selling price for Job 407.

Total cost of Job 407	$ 2,485.00
Markup ($2,485 75%)	1,863.75
Selling price of Job 407	$ 4,348.75

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.)