Sanderlin Corporation Has Two Manufacturing Departments--Machining and Finishing

question 158

Multiple Choice

Sanderlin Corporation has two manufacturing departments--Machining and Finishing. 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 C 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 20% on manufacturing cost to establish selling prices.The calculated selling price for Job C is closest to:

• A) $87,666
• B) $68,920
• C) $13,784
• D) $82,704

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Definitions:

Net Realizable Value

The expected selling price in the ordinary course of business minus the estimated costs of completion and the costs necessary to make the sale.

Normal Selling Price

The standard amount charged to customers for a good or service under normal market conditions.

Beginning Inventory

The value of goods available for sale at the start of an accounting period, before any purchases or sales have occurred.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.