Question

Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates: D
Required: 1. Assume that Landen has historically used a plantwide predetermined overhead Under this approach: a. Compute the
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Answer #1
Required 1 :
a. Plantwide predetermined overhead rate = ( Estimated fixed manufacturing overhead cost / Estimated direct labor hours ) + Variable manufacturing overhead cost per direct labor hour = ( 420000 / 150000 ) + 4.60 7.40 per DLH
b. Job 550
Direct materials 195
Direct labor cost 288
Manufacturing overhead ( 15 * 7.40 ) 111
Total manufacturing cost 594
c. Selling price for Job 550 = Total manufacturing cost * ( 1 + Markup % ) = 594 * ( 1 + 200% )    1782
Required 2 :
a. Plantwide predetermined overhead rate = ( Estimated fixed manufacturing overhead cost / Estimated machine hours ) + Variable manufacturing overhead cost per machine hour = ( 420000 / 75000 ) + 9.20 14.80 per MH
b. Job 550
Direct materials 195
Direct labor cost 288
Manufacturing overhead ( 5 * 14.80 )    74
Total manufacturing cost 557
c. Selling price for Job 550 = Total manufacturing cost * ( 1 + Markup % ) = 557 * ( 1 + 200% ) 1671
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