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 Recently , Job T687 was completed with the following characteristics: 31,400 $219,800 $ 4.00 Number of units in the job Total machine-hours Direct materials Direct labor cost 10 20 $ 580 $1,160 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

Working Notes:
	CACLULATION OF OVERHEAD APPLICATION RATE PER MACHINE HOURS
	Overhead Application Rate =	Budgeted Fixed Manufacturing Overhead Cost	"/"	Budgeted Machine Hours	"="	Estimated Overhead rate PER Machine Hrs
	Overhead Application Rate =	$                     2,19,800	"/"	31,400	"="	$                       7.00
Solution:
	CALCULATION OF SELLING PRICE OF JOB T 687
	Direct Materials	$                               580
	Direct Labor Cost	$                           1,160
	Variable Manufacturing overhead (20 Hrs X $ 4)	$                                 80
	Fixed Manufacturing overhead (20 Hrs X $ 7)	$                               140
	Total Cost	$                           1,960
	Add: Markup @ 40% of $ 1,960 =	$                               784
	Sales Value	$                           2,744
	Divide By	"/" By
	No. of Units in the Job	10
	Selling Price for a Unit = ($ 2,744 / 10 Units)	$                         274.40
	Answer = $ 274.40 Per Unit