Reference no: EM132628952

Brown's factory has three production department- Preparation, Assembly and Finishing with two service departments-Maintenance and Material handling. The budgeted information for the year 2019 is as follows:

                               Department                          Overhead cost

                                 Capacity                                Utilization

Allocated/Apportioned

Preparation                 $45,000                          2000 machine hours

Assembly                   $24,000                             6000 man hours

Finishing                   $21,000

Maintenance                  $3,000

Material Handling            $2,000

The service department cost should be reapportioned to the production department as follows:

                                                   Preparation          Assembly                  Finishing

Maintenance                         50%                        20%                      30%

Material Handling                     40%                          40%                     20%

The wages relating to the preparation department are overhead cost. In the Assembly and Finishing department the wage rate is $2.10 per hour. The administration and selling overheads are to be absorbed in the job at 33 1/3 % of production cost. Distribution should be added to each job according to quotes from outside carriage companies.The company wishes to quote for job #2020. The following information is available for job$2020

Direct material $7,320

Time required Preparation 40 machine hours

Assembly 30 man hours

Finishing 50 man hours

Special design $5,200

Distribution quote from haulage company $2,000

Required:

Problem 1: Calculate the total cost and quotation price for job#2020 where a profit margin of 30% on selling price is applied.