Moody Corporation uses a job-order costing system with a plant wide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates:
Machine-hours required to support estimated production . . . . . . . . . . . 100,000
Fixed manufacturing overhead cost . . . . . . . . . . . . . . . . . . . . . . . . . . . $650,000
Variable manufacturing overhead cost per machine-hour . . . . . . . . . . . . . $3.00
Required:
1. Compute the plant wide predetermined overhead rate.
2. During the year, Job 400 was started and completed. The following information was available with respect to this job:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $450
Direct labor cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210
Machine-hours used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Compute the total manufacturing cost assigned to Job 400.
3. If Job 400 includes 52 units, what is the unit product cost for this job?
4. If Moody uses a markup percentage of 120% of its total manufacturing cost, then what selling price per unit would it have established for Job 400?
5. If Moody hired you as a consultant to critique its pricing methodology, what would you say?