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 115,000 Machine-hours required to support estimated production 57,500 Fixed manufacturing overhead cost $ 322,000 Variable manufacturing overhead cost per direct labor-hour $ 3.40 Variable manufacturing overhead cost per machine-hour $ 6.80
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 | 115,000 |
|---|---|
| Machine-hours required to support estimated production | 57,500 |
| Fixed manufacturing overhead cost | $ 322,000 |
| Variable manufacturing overhead cost per direct labor-hour | $ 3.40 |
| Variable manufacturing overhead cost per machine-hour | $ 6.80 |
During the year, Job 550 was started and completed. The following information is available with respect to this job:
| Direct materials | $ 252 |
|---|---|
| Direct labor cost | $ 370 |
| Direct labor-hours | 15 |
| Machine-hours | 5 |
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
c. If 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.
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.)
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
