Question

Cull 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 total fixed manufacturing overhead cost of $442,500, variable manufacturing overhead of $2.50 per machine-hour, and 59,000 machine-hours. The company has provided the following data concerning Job X455 which was recently completed:

Number of units in the job		10
Total machine-hours		80
Direct materials	$	870
Direct labor cost	$	1,740

If the company marks up its unit product costs by 20% then the selling price for a unit in Job X455 is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Computation the selling price per unit is:

Selling price per unit = Total cost of each unit + Marks up cost

= $341 + $68.20

= $409.20

Hence, the selling price per unit is $409.20

Working notes:

1.

Computation the cost of direct materials per unit is:

Cost of direct materials per unit = Cost of direct materials / Number of units

= $870 / 10

= $87

Hence, the cost of direct materials per unit is $87.

2.

Computation the cost of direct labor per unit is:

Cost of direct labor per unit = Cost of direct labor / Number of units

= $1,740 / 10

= $174

Hence, the cost of direct labor per unit is $174.

3.

Computation the variable cost of overhead is:

Variable cost of overhead = (Total machine hours / Number of units) * Variable cost per hour

= (80 / 10) * $2.50

= 8 * $2.50

= $20

Hence, the variable cost of overhead is $20.

4.

Computation the fixed cost of overhead is:

Fixed cost of overhead = (Total cost of fixed cost / Number of hours) * (Total machine hours / Number of units)

= ($ 442,500 / 59,000) * (80 / 10)

= $7.5 * 8

= $60

Hence, the fixed cost of overhead is $60.

5.

Computation the total cost of each unit is:

Total cost of each unit = Cost of direct materials per unit + Cost of direct labor per unit + Variable cost of overhead + Fixed cost of overhead

= $87 + $174 + $20 + $60

= $341

Hence, the total cost of each unit is $341.

6.

Computation the marks up cost is:

Marks up cost = Total cost of each unit * Marks up percentage

= $341 * 20%

= $68.20

Hence, the marks up cost is $68.20