CovidGo Sdn Bhd is a manufacturer of vaccines for the Asian market. The company uses a job-order costing system. The following are the cost estimates for the year 2022:

Direct labour-hours 140,000

Machine-hours 70,000

Fixed manufacturing overhead cost 784,000

Variable manufacturing overhead cost per direct labour-hour 2.00

Variable manufacturing overhead cost per machine-hour 4.00

During the year, Job 777 was started and completed. The following information is available with respect to this job: Direct materials 175

Direct labour cost 225

Direct labour-hours 15 hours

Machine-hours 5 hours

Required:

i. CovidGo has for the past years used a plantwide predetermined overhead rate with direct labour-hours as the allocation base.

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 777.

c. If CovidGo uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 777? (5 marks

ii. CovidGos cost controller believes that machine-hours is a better allocation base than direct labour-hours.

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 777.

c. If CovidGo uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 777?

iii. Assume that CovidGos controller is right about machine-hours being a more accurate overhead cost allocation base than direct labour-hours. If the company continues to use direct labour-hours as its only overhead cost allocation base what implications does this have for pricing jobs such as Job 777?