Landen Corporation uses a joborder costing system At the beg

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 Machine-hours required to support estimated production Pixed manufacturing overhead cost Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour 105,000 52,500 $294,000 $ 3.00 $ 6.00 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials Direct labor cost Direct labor-hours Machine-hours s 229 293 15 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. lf 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 Preletermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar) Pry 1 of 41 Next >

Solution

Answer to Requirement 1.

Part a)

Predetermined Overhead Rate = Estimated Manufacturing Overhead Cost / Estimated Direct Labor Hours
Estimated Manufacturing Overhead Cost = $294,000 + ($3.00 *105,000)
Estimated Manufacturing Overhead Cost = $294,000 + $315,000
Estimated Manufacturing Overhead Cost = $609,000

Predetermined Overhead Rate = 609,000 / 105,000
Predetermined Overhead Rate = $5.80 per DLH

Part b)

Total Manufacturing Cost of Job 550 = Direct Materials + Direct Labor + Manufacturing Overhead applied
Manufacturing Overhead applied = $5.80 * 15 = $87
Total Manufacturing Cost of Job 550 = $229 + $293 + $87
Total Manufacturing Cost of Job 550 = $609

Part c)

Selling Price = Manufacturing Cost + Markup
Selling Price = $609 + ($609 * 200%)
Selling Price = $609 + $1,218
Selling Price = $1,827

Answer to Requirement 2.

Part a)

Predetermined Overhead Rate = Estimated Manufacturing Overhead Cost / Estimated MachineHours
Estimated Manufacturing Overhead Cost = $294,000 + ($6.00 *52,500)
Estimated Manufacturing Overhead Cost = $294,000 + $315,000
Estimated Manufacturing Overhead Cost = $609,000

Predetermined Overhead Rate = 609,000 / 52,500
Predetermined Overhead Rate = $11.60 per MH

Part b)

Total Manufacturing Cost of Job 550 = Direct Materials + Direct Labor + Manufacturing Overhead applied
Manufacturing Overhead applied = $11.60 * 5 = $58
Total Manufacturing Cost of Job 550 = $229 + $293 + $58
Total Manufacturing Cost of Job 550 = $580

Part c)

Selling Price = Manufacturing Cost + Markup
Selling Price = $580 + ($580 * 200%)
Selling Price = $580 + $1,160
Selling Price = $1,740