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 31,000 Total fixed manufacturing overhead cost $310,000 Variable manufacturing overhead per machine-hour $ 4.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 30 Direct materials $ 730 Direct labor cost $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.) Multiple Choice $365.40 $306.60 $406.00 $104.40

Answer 1

Answer is $365.40

Estimated manufacturing overhead = Estimated variable manufacturing overhead per machine hour * Estimated machine hours + Estimated fixed manufacturing overhead
Estimated manufacturing overhead = $4.00 * 31,000 + $310,000
Estimated manufacturing overhead = $434,000

Predetermined overhead rate = Estimated manufacturing overhead / Estimated machine hours
Predetermined overhead rate = $434,000 / 31,000
Predetermined overhead rate = $14.00 per machine hour

Manufacturing overhead applied = Predetermined overhead rate * Actual machine hours
Manufacturing overhead applied = $14.00 * 30
Manufacturing overhead applied = $420

Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead applied
Total manufacturing cost = $730 + $1,460 + $420
Total manufacturing cost = $2,610

Unit product cost = Total manufacturing cost / Units produced
Unit product cost = $2,610 / 10
Unit product cost = $261.00

Selling price per unit = Manufacturing cost + Markup
Selling price per unit = $261.00 + 40% * $261.00
Selling price per unit = $365.40