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 |
|
140,000 |
Machine-hours required to support estimated production |
|
70,000 |
Fixed manufacturing overhead cost |
$ |
784,000 |
Variable manufacturing overhead cost per direct labor-hour |
$ |
2.00 |
Variable manufacturing overhead cost per machine-hour |
$ |
4.00 |
|
During the year, Job 550 was started and completed. The following information is available with respect to this job:
|
|
|
Direct materials |
$ |
175 |
Direct labor cost |
$ |
225 |
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 550?
(Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar.)