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 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 5507 (Round your intermediate calculations to 2 decimal places. Round your "Predetermined Overhead Rato" answers to 2 decimal places and all other answers to the nearest whole dollar.)
1. Direct labor hours:
a. Predetermined overhead rate per DLH
b. Total manufacturing cost of Job 650
c. Selling price
2. Machine hours:
a. Predetermined overhead rate per MH
b. Total manufacturing cost of Job 660
c. Selling price

Answer 1

Answer:

Instructions are below.

Explanation:

Giving the following information:

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

Job 550:

Direct materials $ 273

Direct labor cost $ 237

Direct labor-hours 15

Machine-hours 5

1) a. First, we need to calculate the predetermined overhead rate based on direct labor hours:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (266,000/95,000) + 2.6

Predetermined manufacturing overhead rate= $5.4 per direct labor hour

b. Total manufacturing cost= direct material + direct labor + allocated overhead

Total manufacturing cost= 273 + 237 + 5.4*15

Total manufacturing cost= $591

c. Selling price= 591*2= $1,182

2) a.

Predetermined manufacturing overhead rate= (266,000/47,500) + 5.2

Predetermined manufacturing overhead rate= $10.8 per machine hour

b. Total manufacturing cost= direct material + direct labor + allocated overhead

Total manufacturing cost= 273 + 237 + 10.8*5

Total manufacturing cost= $564

c. Selling price= 564*2= $1,128