Molash Corporation Has Two Manufacturing Departments--Machining and Assembly

question 78

Multiple Choice

Molash Corporation has two manufacturing departments--Machining and Assembly.The company used the following data at the beginning of the year to calculate predetermined overhead rates:
During the most recent month,the company started and completed two jobs--Job B and Job L.There were no beginning inventories.Data concerning those two jobs follow:
Assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both production departments.Further assume that the company uses a markup of 50% on manufacturing cost to establish selling prices.The calculated selling price for Job L is closest to:

• A) $40,320
• B) $41,933
• C) $13,440
• D) $26,880

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Definitions:

Operating Cycle

A measure of the time span between the purchase of inventory and the collection of cash from accounts receivable, highlighting the time taken for a business to turn its inventory into cash.

Current Liabilities

Short-term financial obligations a company must pay within a year, such as accounts payable, short-term loans, and accrued expenses.

Liquidation

The process of bringing a business to an end and distributing its assets to claimants, often occurring when a company is insolvent and unable to meet its financial obligations.

Operating Cycle

An operating cycle is the average period of time it takes for a business to convert its inventory into cash proceeds from sales.