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Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates: Direct labor-hours required to support estimated

Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:

Direct labor-hours required to support estimated production 65,000
Machine-hours required to support estimated production 32,500
Fixed manufacturing overhead cost $ 195,000
Variable manufacturing overhead cost per direct labor-hour $ 1.20
Variable manufacturing overhead cost per machine-hour $ 2.40

During the year, Job 550 was started and completed. The following information is available with respect to this job:

Direct materials $ 250
Direct labor cost $ 318
Direct labor-hours 15
Machine-hours 5

Required:

1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 550.

c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

2. Assume that Landens controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:

a. Compute the plantwide predetermined overhead rate.

b. Compute the total manufacturing cost of Job 550.

c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

1. Direct labor-hours:

1a. Predetermined overhead rate

per DLH

1b. Total manufacturing cost of Job 550

1c. Selling price

2. Machine-hours:

2a. Predetermined overhead rate

per MH

2b. Total manufacturing cost of Job 550

2c. Selling price

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