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 125,000 machine-hours required to support estimated production 62,500 fixed manufacturing overhead cost $ 350,000 variable manufacturing overhead cost per direct labor-hour $ 3.80 variable manufacturing overhead cost per machine-hour $ 7.60 during the year, job 550 was started and completed. the following information is available with respect to this job: direct materials $ 201 direct labor cost $ 240 direct labor-hours 15 machine-hours 5 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. if landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for job 550?
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Ответ:
Instructions are listed below
Explanation:
We are provided with the following information:
Predetermined costs:
Direct labor-hours 125,000
Machine-hours 62,500
Fixed manufacturing overhead cost $ 350,000
Variable manufacturing overhead cost per direct labor-hour $ 3.80
Variable manufacturing overhead cost per machine hour $ 7.60
Job 550:
Direct materials $ 201
Direct labor cost $ 240
Direct labor-hours 15
Machine-hours 5
1) Overhead rate with direct labor-hours as the allocation base.
a) Plantwide overhead rate= Variable manufacturing overhead cost per direct labor-hour + (fixed overhead/Direct labor-hours)=3.80+(350000/125000)= 3.80 + 2.8= $6.6
b) Generally accepted accounting principles require that the cost of goods sold shall consist of:
the cost of direct materials
the cost of direct labor
the cost of manufacturing overhead
manufacturing cost= 201 + 240 + (6.6*15)=$540
c) Price= 540*2= $1080
2) Overhead rate with direct machine-hours as the allocation base.
a) Plantwide overhead rate= Variable manufacturing overhead cost per machine labor-hour + (fixed overhead/machine-hours)=7.60+(350000/62500)= 7.60 + 5.6= $13.2
b) manufacturing cost= 201 + 240 + (13.2*15)=$639
c) Price= 639*2=$1278
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