Question

Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:_______.
Total machine-hours 30,000
Total fixed manufacturing overhead cost $252,000
Variable manufacturing overhead per machine-hour $ 2.10
Recently, Job T687 was completed with the following characteristics:________.
Number of units in the job 10
Total machine-hours 30
Direct materials $ 675
Direct labor cost $1,050
If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest:______

Answer 1

Answer:

Selling price= 240*1.4= $336

Explanation:

First, we need to calculate the predetermined overhead rate:

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

Predetermined manufacturing overhead rate= (252,000/30,000) + 2.1

Predetermined manufacturing overhead rate= $10.5 per machine hour

Job T687:

Number of units in the job 10

Total machine-hours 30

Direct materials $ 675

Direct labor cost $1,050

Now, we need to allocate overhead and determine the total cost:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 10.5*30= $315

Total cost= 675 + 1,050 + 315= $2,040

Finally, the unitary cost and selling price:

Unitary cost= 2,040/10= $240

Selling price= 240*1.4= $336