apter 2 Landen Corporation uses a job-order costing system. At the beginning of

Question

apter 2 Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the folowing estimates Direet labor-hours required to support estinated production Haehine-hour, required to ,upport estiuted production Pixed manufactur Variable nufacturing overhead cost per direct 1abor-hour 180,000 $ 1.00 Variable mangfact ring overhead coat per machine-hour During the year, Job 550 was started and completed. The following information is available with respect to this job: bireet labor eost 323 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. Landen uses a markup percentage of 200% of its total manufacturing cost, what seling price would it establish for Job 5507 2. Assume that Landen's controller believes that machine-hours is a better alocation base than direct labor-hours. Under this a Compute the plantwide predetermined overhead rate b. Compute the total manufacturing cost of Job 550 c. If Landen uses markup percentage of 200% of its total manufacturing ost, what seling 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. per OH b. Total manufacturing cost of Job 550 MacBook Air 20 3 4 5 6 7 8 9

Explanation / Answer

Part a)

Predetermined Overhead Rate = Estimated Manufacturing Overhead Cost / Estimated Direct Labor Hours
Estimated Manufacturing Overhead Cost = $180,000 + ($1.00 * 60,000)
Estimated Manufacturing Overhead Cost = $180,000 + $60,000
Estimated Manufacturing Overhead Cost = $240,000

Predetermined Overhead Rate = 240,000 / 60,000
Predetermined Overhead Rate = $4.00 per DLH

Part b)

Total Manufacturing Cost of Job 550 = Direct Materials + Direct Labor + Manufacturing Overhead applied
Manufacturing Overhead applied = $4.00 * 15 = $60
Total Manufacturing Cost of Job 550 = $213 + $323 + $60
Total Manufacturing Cost of Job 550 = $596

Part c)

Selling Price = Manufacturing Cost + Markup
Selling Price = $596 + ($596 * 200%)
Selling Price = $596 + $1,192
Selling Price = $1,788

Answer to Requirement 2.

Part a)

Predetermined Overhead Rate = Estimated Manufacturing Overhead Cost / Estimated MachineHours
Estimated Manufacturing Overhead Cost = $180,000 + ($2.00 *30,000)
Estimated Manufacturing Overhead Cost = $180,000 + $60,000
Estimated Manufacturing Overhead Cost = $240,000

Predetermined Overhead Rate = 240,000 /30,000
Predetermined Overhead Rate = $8.00 per MH

Part b)

Total Manufacturing Cost of Job 550 = Direct Materials + Direct Labor + Manufacturing Overhead applied
Manufacturing Overhead applied = $8.00 * 5 = $40
Total Manufacturing Cost of Job 550 = $213 + $323 + $40
Total Manufacturing Cost of Job 550 = $576

Part c)

Selling Price = Manufacturing Cost + Markup
Selling Price = $576 + ($576 * 200%)
Selling Price = $576 + $1,152
Selling Price = $1,728

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