Landen Corporation uses a job-order costing system. At the beginning of the year
ID: 2405850 • Letter: L
Question
Landen Corporation uses a job-order costing system. At the beginning of the year. the company made the following estimates: Direct labor-hours required to support estimated production Machine-hours required to support estimated production Fixed manufacturing overhead cost Variable manufacturing Variable manufacturing overhead cost per machine-hour 148,886 7e,08e $784,08 $ 2.ee $ 4.8 overhead cost per direct labor-hour During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials Direct labor cost Direct labor-hours Machine-hours 175 225 15 Required: 1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base Under this approach a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. ?.? Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? 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. o. Compute the total manufacturing cost of Job 550. ?.f Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? Round your Intermediate calculetions to 2 declmal pleces. Round your Predetermined Overhead Rate answers to 2 declmal plece @nd all other answers to the nearest whole dollar..) 1. Direct labor-hours overnead rate per DLH b. Total manufacturing cost of Job 550 c. Selling price per MH b. Total manufacturing cost of Job 550 o. Selling priceExplanation / Answer
Plantwide Pre determined Overhead Rate with Direct labor hours
= Fixed Manufacturing Overhead/Total Direct Labor Hours
=784000/140000 = 5.6 per Direct Labour Hour
Plantwide Pre determined Overhead Rate with Machine hours
= Fixed Manufacturing Overhead/Total Machine Hours
=784000/70000 = 11.2 per Machine Hour
Calculation of Manufacturing Cost and Selling Price:
1.Direct Labor Hours
Predetermined Overhead rate
5.6
Per DLH
Total Manufacturing Cost
514
Selling price
1542
2.Machine Hours
Predetermined Overhead rate
11.2
Per MH
Total Manufacturing Cost
476
Selling price
1428
1.Total Manufacturing Cost = Direct material+Direct Labor Cost+Variable Manufacturing Overheads+Fixed Overheads
=175+225+15*2+15*5.6
=514
Mark-up 200% of 514 = 1028
Selling Price = 1542
2. Machine Hours:
Total Manufacturing Cost = Direct material+Direct Labor Cost+Variable Manufacturing Overheads+Fixed Overheads
=175+225+5*4+5*11.2
=476
Mark-up 200% of 476 = 952
Selling Price = 1428
1.Direct Labor Hours
Predetermined Overhead rate
5.6
Per DLH
Total Manufacturing Cost
514
Selling price
1542
2.Machine Hours
Predetermined Overhead rate
11.2
Per MH
Total Manufacturing Cost
476
Selling price
1428
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