Landen Corporation uses job-order costing. At the beginning of the year, it made the following estimates:
Direct labor-hours required to support estimated production
100,000
Machine-hours required to support estimated production
50,000
Fixed manufacturing overhead cost
$ 280,000
Variable manufacturing overhead cost per direct labor-hour
$ 2.80
Variable manufacturing overhead cost per machine-hour
$ 5.60
During the year, Job 550 was started and completed. The following information pertains to this job:
Direct materials
$ 216
Direct labor cost
$ 327
Direct labor-hours
15
Machine-hours
5
Required:
Assume Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:
Compute the plantwide predetermined overhead rate.
Compute the total manufacturing cost of Job 550.
If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
Assume Landens controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:
Compute the plantwide predetermined overhead rate.
Compute the total manufacturing cost of Job 550.
If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
Note: 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.
Answer & Explanation
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