8.Landen Corporation uses a job-order costing system. At the beginning of the ye

Question

8.Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:

During the year, Job 550 was started and completed. The following information is available with respect to this job:

Required:

2. Assume that Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 550.

c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

(Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar.)

Direct labor-hours required to support estimated production 145,000 Machine-hours required to support estimated production 72,500 Fixed manufacturing overhead cost $ 406,000 Variable manufacturing overhead cost per direct labor-hour $ 4.40 Variable manufacturing overhead cost per machine-hour $ 8.80

Explanation / Answer

Required 2 a) Plantwided predetermined overhead rate fixed manufacturing overhead cost (406,000/72,500) 5.6 variable manufacturing overhead cost per direct labor 8.8 Plantwided predetermined overhead rate 14.4 answer b) Total manufacturing cost for job 550 Direct materials 183 direct labor cost 295 overhead applied (5*14.4) 72 total manufacturing cost 550 c) selling price total manufacturing cost *200% 550*200% 1100 Answer

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