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 110,000
Machine-hours required to support estimated production 55,000
Fixed manufacturing overhead cost $ 308,000
Variable manufacturing overhead cost per direct labor-hour $ 3.20
Variable manufacturing overhead cost per machine-hour $ 6.40
During the year, Job 550 was started and completed. The following information is available with respect to this job:
Direct materials $ 187
Direct labor cost $ 370
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.)
1. Direct labor-hours:
a. Predetermined overhead rate per DLH
b. Total manufacturing cost of Job 550
c. Selling price
2. Machine-hours:
a. Predetermined overhead rate per MH
b. Total manufacturing cost of Job 550
c. Selling price