Beans Corporation uses a job-order costing system with a single plantwide predet

Question

Beans 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 total fixed manufacturing overhead cost of $162,000, variable manufacturing overhead of $2.80 per direct labor-hour, and 60,000 direct labor-hours. Recently, Job K818 was completed with the following characteristics:

If the company marks up its unit product costs by 40% then the selling price for a unit in Job K818 is closest to:

Number of units in the job 10 Total direct labor-hours 50 Direct materials $ 920 Direct labor cost $ 1,400

Explanation / Answer

Total product costs =
Direct material + Direct labor + Variable manufacturing overheads + Unit fixed overheads
= $920 + $1400 + 50*$2.80 + $162000/60000 *50 = $2595
Markup @40% = $1038

Total sales = $3633
Selling price of Job k818 = $3633/10 = $363.3 per job

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