Mcewan Corporation uses a joborder costing system with a sin

Mcewan Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on 36,000 direct labor-hours, total fixed manufacturing overhead cost of $273,600, and a variable manufacturing overhead rate of $2.80 per direct labor-hour. Job X941, which was for 50 units of a custom product, was recently completed. The job cost sheet for the job contained the following data:

Total direct labor-hours 400

Direct materials $ 800

Direct labor cost $ 6,700

Required: Calculate the selling price for Job X941 if the company marks up its unit product costs by 20%.

Solution

Calculate selling price for job X941 :

Predetermine overhead rate = 273600/36000 = 7.60+2.80 = 10.40 per hour

Overhead cost for job = (10.40*400) = 4160