Reference no: EM132934841
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 95,000
Machine-hours required to support estimated production 47,500
Fixed manufacturing overhead cost $266,000
Variable manufacturing overhead cost per direct labor-hour $2.60
Variable manufacturing overhead cost per machine hour $5.20
During the year, Job 550 was started and completed. The following information is available with respect to this job:
Direct materials $273
Direct labor cost $237
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 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?
2. Assume that Landen's controller believes that machine hours are a better allocation base than direct labor hours. Under this approach:
a. The plantwide predetermined overhead rate.
b. 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?
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