My company uses job-order costing. At the beginning of the year, it made the following estimates: 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 During the year, Job 550 was started and completed. The following information pertains to this job: Direct materials $ 183 Direct labor cost $ 295 Direct labor-hours 15 Machine-hours 5 Assume Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach: Compute the total manufacturing cost of Job 550. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? Assume Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach: Compute the plantwide predetermined overhead rate. Compute the total manufacturing cost of Job 550. If we use a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

Related questions

Question

My company uses job-order costing. At the beginning of the year, it made the following estimates:

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

During the year, Job 550 was started and completed. The following information pertains to this job:

Assume Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:
1. Compute the total manufacturing cost of Job 550.
2. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
Assume Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:
1. Compute the plantwide predetermined overhead rate.
2. Compute the total manufacturing cost of Job 550.
3. If we use a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?