Mcewan Corporation uses a job-order costing system with a single plantwide prede

Question

Mcewan Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on 36,000 direct labor-hours, total fixed manufacturing overhead cost of $273,600, and a variable manufacturing overhead rate of $2.80 per direct labor-hour. Job X941, which was for 50 units of a custom product, was recently completed. The job cost sheet for the job contained the following data:

Total direct labor-hours 400

Direct materials $ 800

Direct labor cost $ 6,700

Required: Calculate the selling price for Job X941 if the company marks up its unit product costs by 20%.

Explanation / Answer

Calculate selling price for job X941 :

Predetermine overhead rate = 273600/36000 = 7.60+2.80 = 10.40 per hour

Overhead cost for job = (10.40*400) = 4160

Unit cost Total Direct material 16 800 Direct labour 134 6700 Overhead cost 83.20 4160 Total product cost 233.20 11660 Markup 46.64 2332 Selling price 279.84 13992

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