Cull Corporation uses a job-order costing system with a single plantwide predete

Question

Cull Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $465,000, variable manufacturing overhead of $2.10 per machine- hour, and 75,000 machine-hours. The company has provided the following data concerning Job X455 which was recently completed: 10 Number of units in the job Total machine-hours Direct materials Direct labor cost 80 $ 750 1,500 If the company marks up its unit product costs by 20% then the selling price for a unit in Job X455 is closest to: (Round your intermediate calculations to 2 decimal places.)

Explanation / Answer

Fixed manufacturing overhead rate = Fixed manufacturing overhead/Machine hours

= 465,000/75,000

= $6.2 per machine hour

Calculation of cost of job X455

Total cost of producing 10 units = $2,914

Hence, cost of producing 1 unit = 2,914/10

= $291.4

Mark up required = 20%

Hence mark up = 291.4 x 20%

= $58.28

Selling price of 1 unit = Cost price + Mark up

= 291.4 + 58.28

= $349.68

Kindly give a positive answer if you are satisfied with the answer. Feel free to ask if you have any doubt. Thanks.

Direct materials 750 Direct labor cost 1,500 Prime cost 2,250 Variable manufacturing overheads ( 80 x 2.10) 168 Fixed manufacturing overheads (80 x 6.20) 496 Total cost 2,914

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