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 | 160,000 | |
Machine-hours required to support estimated production | 80,000 | |
Fixed manufacturing overhead cost | $ | 480,000 |
Variable manufacturing overhead cost per direct labor-hour | $ | 5.00 |
Variable manufacturing overhead cost per machine-hour | $ | 10.00 |
During the year, Job 550 was started and completed. The following information is available with respect to this job:
Direct materials | $ | 240 |
Direct labor cost | $ | 233 |
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?
(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.)
1a | ||||
Predetermined overhead rate | Total overhead costs/Estimated direct labor hours | |||
Predetermined overhead rate | (480000+(160000*5))/160,000 | |||
Predetermined overhead rate | 1280000/160000 | |||
Predetermined overhead rate | $8.00 | per DLH | ||
b. | ||||
Calculation of total job costs | ||||
Direct materials | $240.00 | |||
Direct labor costs | $233.00 | |||
Overhead applied (8*15) | $120.00 | |||
Total job costs | $593.00 | |||
c. | ||||
Calculation of selling price | ||||
Total job costs | $593.00 | |||
Add: Mark-up | $1,186.00 | 593*200% | ||
Selling price | $1,779.00 | |||
2a | ||||
Predetermined overhead rate | Total overhead costs/Estimated machine hours | |||
Predetermined overhead rate | (480000+(80000*10))/80,000 | |||
Predetermined overhead rate | 1280000/80000 | |||
Predetermined overhead rate | $16.00 | per machine hour | ||
b. | ||||
Calculation of total job costs | ||||
Direct materials | $240.00 | |||
Direct labor costs | $233.00 | |||
Overhead applied (5*16) | $80.00 | |||
Total job costs | $553.00 | |||
c. | ||||
Calculation of selling price | ||||
Total job costs | $553.00 | |||
Add: Mark-up | $1,106.00 | 553*200% | ||
Selling price | $1,659.00 | |||
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made...
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 60,000 Machine-hours required to support estimated production 30,000 Fixed manufacturing overhead cost $ 180,000 Variable manufacturing overhead cost per direct labor-hour $ 1.00 Variable manufacturing overhead cost per machine-hour $ 2.00 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials $ 213...
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 90,000 Machine-hours required to support estimated production 45,000 Fixed manufacturing overhead cost $ 252,000 Variable manufacturing overhead cost per direct labor-hour $ 2.40 Variable manufacturing overhead cost per machine-hour $ 4.80 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials $ 236...
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 60,000 Machine-hours required to support estimated production 30,000 Fixed manufacturing overhead cost $ 180,000 Variable manufacturing overhead cost per direct labor-hour $ 1.00 Variable manufacturing overhead cost per machine-hour $ 2.00 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials $ 213...
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 65,000 Machine-hours required to support estimated production 32,500 Fixed manufacturing overhead cost $ 195,000 Variable manufacturing overhead cost per direct labor-hour $ 1.20 Variable manufacturing overhead cost per machine-hour $ 2.40 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials $ 250...
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...
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 145,000 Machine-hours required to support estimated production 72,500 Fixed manufacturing overhead cost 406,000 Variable manufacturing overhead cost per direct labor-hour 4.40 Variable manufacturing overhead cost per machine-hour 8.80 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials 183 Direct labor cost 295...
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 Machine-hours required to support estimated production Fixed manufacturing overhead cost Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour 160,000 80,000 $ 480,000 $ 5.00 $ 10.00 During the year, Job 550 was started and completed. The following information is available with respect to this job: $ 240 $ 233...
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 Machine-hours required to support estimated production Fixed manufacturing overhead cost Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour 110,000 55,000 $308,000 $ 3.20 $ 6.40 During the year, Job 550 was started and completed. The following information is available with respect to this job: $ 187 $ 370 Direct...
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 Machine-hours required to support estimated production Fixed manufacturing overhead cost Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour 115,000 57,500 $322,000 $ 3.40 $ 6.80 During the year, Job 550 was started and completed. The following information is available with respect to this job: $ 252 $ 370 Direct...
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 Machine-hours required to support estimated production Fixed manufacturing overhead cost Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour 155,000 77,500 $465,000 $ 4.80 $ 9.60 During the year, Job 550 was started and completed. The following information is available with respect to this job: $ 210 $ 349 Direct...