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Problem : Product Costing
Landen Corporation uses joborder costing. At the beginning of the year, it made the following estimates:
Direct laborhours required to support estimated production
Machinehours required to support estimated production
Fixed manufacturing overhead cost $
Variable manufacturing overhead cost per direct laborhour $ $
Variable manufacturing overhead cost per machinehour $
During the year, Job was started and completed. The following information pertains to this job:
Direct materials $
Direct labor cost $
Direct laborhours
Machinehours
Required:
Assume Landen has historically used a plantwide predetermined overhead rate with direct laborhours as the allocation base. Under this approach:
Compute the plantwide predetermined overhead rate.
Compute the total manufacturing cost of Job
If Landen uses a markup percentage of of its total manufacturing cost, what selling price would it establish for Job
Problem Continued
Assume Landen's controller believes that machinehours is a better allocation base than direct laborhours. Under this approach:
Compute the plantwide predetermined overhead rate.
Compute the total manufacturing cost of Job
If Landen uses a markup percentage of of its total manufacturing cost, what selling price would it establish for Job
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