Saved Landen Corporation uses a job-order costing system. At the beginning of th

Question

Saved 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 estinated production Fixed manufacturing overhead cost Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine hour 140,809 70,000 $784,006 $ 2.00 5 4.00 During the year, Job 550 was started and completed. The following information is available with respect to this job: es Direct materials Direct labor cost Direct labor-hours Machine-hours s 175 5 225 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 c. ILnden 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. b. Compute the total manufacturing cost of Job 550 Landen uses a markup pecentae of 200s% of is total manufactuting cost, what seling price would it establish for Job 550? (Round your lintermediate colculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar.) ?Prey lot 211 Next >

Explanation / Answer

1a) Predetermine overhead rate = (784000/140000)+2 = 7.60 per labour hour

1b) Compute total manufacturing cost :

c) Total Selling price = 514+(514*200%) = 1542

2a) Predetermine overhead rate = (784000/70000)+4 = 15.20 per machine hour

2b) Compute total manufacturing cost :

c) Total Selling price = 476+(476*200%) = 1428

Direct material 175 Direct labour 225 Manufacturing overhead (15*7.6) 114 Total manufacturing cost 514

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