Question

Lupo 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 the following data: Total machine-hours Total fixed manufacturing overhead cost Variable manufacturing overhead per machine- hour 30,300 $575,700 $ 4.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job Total machine-hours Direct materials Direct labor cost $ 730 $1,460 If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

CALCULATION OF PREDETERMINED OVERHEAD RATE:
Variable mfg overhead per machine hour	$                   4.00	Per MH
Fixed manufacturing overhead per hour = 575700/30300 =	$                 19.00	Per MH
Predetermined overhead rate = 4+19 =	$                 23.00	Per MH
WORKINGS FOR COST OF PRODUCTION:
The price would be:
Direct material cost	$                    730
Direct labor cost	$                 1,460
Manufacturing overhead assigned = 30*23 =	$                    690
Total cost of production	$                 2,880
Mark up 40% = 2880*40% =	$                 1,152
Total selling price	$                 4,032
Number of units	10	Units
Price per unit = 4032/10 =	$               403.20