Question

Cull 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 total fixed manufacturing overhead cost of $458,800, variable manufacturing overhead of $3.00 per machine-hour, and 74,000 machine-hours. The company has provided the following data concerning Job X455 which was recently completed.
Number of units in the job 10
Total machine-hours 80
Direct materials $810
Direct labor cost $1,620
If the company marks up its unit product costs by 20% then the selling price for a unit in Job X455 is closest to:______.
a. $379.92.
b. $63.32.
c. $316.60.
d. $399.92.

Answer 1

Answer:

a. $379.92

Explanation:

As per the data given in the question,

Direct material per unit = $810 ÷ 10

= $81

Direct labor per unit = $1,620 ÷ 10

= $162

Variable O/H per unit = $3.00 × 80 ÷ 10

= $24

Fixed MFG operating hours per unit = $458,800 ÷ 74,000×8

= $49.6

Total cost = $316.6

Mark up = 316.6×20%

= $63.32

Selling price = $316.6 + $63.32

= $379.92

Hence, option (a) $379.92 is correct answer

First we have to compute the total cost and then added the markup so that the selling price could come