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Problem 2-16 Plantwide Predetermined Overhead Rates; Pricing (L02-1, LO2-2, LO2-3) Landen Corporation uses a job-order costin
2. Assume that Landens controller believes that machine-hours is a better allocation base th approach: a. Compute the plantw
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Answer #1
1) Direct Labor Hours
a) Predetermined OH rate = [(Fixed Manu. OH cost / Direct Labor Hours) + Variable Manu. OH cost per direct labor hour]
= [($ 784000 / 140000) + $ 2]
= $      7.60
b) Job 550
Direct Materials $    175.00
Direct Labor Cost $    225.00
Manu. OH $    114.00 ($ 7.6 x 15)
Total Manu. Cost $    514.00
c) Selling Price = $ 514 x 300%
= $ 1,542.00
2) Machine Hours
a) Predetermined OH rate = [(Fixed Manu. OH cost / Machine Hours) + Variable Manu. OH cost per Machine hour]
= [($ 784000 / 70000) + $ 4]
= $   15.20
b) Job 550
Direct Materials $       175.00
Direct Labor Cost $       225.00
Manu. OH $          76.00 ($ 15.20 x 5)
Total Manu. Cost $       476.00
c) Selling Price = $ 476 x 300%
= $    1,428.00
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