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2 : 3 8 PM Fri Feb 2 3 ACC 2 0 2 0 2 2 0 Test 2 0 1 ( without 2 0

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Problem 2: Product Costing
Landen Corporation uses job-order costing. At the beginning of the year, it made the following estimates:
Direct labor-hours required to support estimated production 90,000
Machine-hours required to support estimated production 45,000
Fixed manufacturing overhead cost $252,000
Variable manufacturing overhead cost per direct laborhour $ $2.40
Variable manufacturing overhead cost per machinehour $4.80
During the year, Job 550 was started and completed. The following information pertains to this job:
Direct materials $236
Direct labor cost $371
Direct labor-hours 15
Machine-hours 5
Required:
Assume Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:
Compute the plantwide predetermined overhead rate.
Compute the total manufacturing cost of Job 550.
If Landen uses a markup percentage of 300% of its total manufacturing cost, what selling price would it establish for Job 550?
Problem 2 Continued
Assume Landen's controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:
4. Compute the plantwide predetermined overhead rate.
5. Compute the total manufacturing cost of Job 550.
6. If Landen uses a markup percentage of 300% of its total manufacturing cost, what selling price would it establish for Job 550?
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