Advanced Placement (AP), 25.05.2020 07:58 cherry12345627
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 75,000
Machine-hours required to support estimated production 37,500
Fixed manufacturing overhead cost $ 225,000
Variable manufacturing overhead cost per direct labor-hour $ 1.60
Variable manufacturing overhead cost per machine-hour $ 3.20
During the year, Job 550 was started and completed. The following information is available with respect to this job:
Direct materials $ 178
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.)
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