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Northern lilin. archi Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates Direct labor-bours
Northern lilin. archi Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates Direct labor-bours required to support estimated production 140,000 Machine hours required to support estimated production 70,000 Fixed manufacturing overhead cost $784,000 Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour $2.00 $4.00 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials $175 Direct labor cost $225 Direct labor-hours Machine-houn 15 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 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 Astame that Landen's controller believes that machine-hours is a better allocation base than direct labor-bours Under this approach 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 3. Assume that Landen's controller is right about machine-hours being a more accurate overhead cost allocation base than direct labor- hours. If the company continues to use direct labor-hours as its only overhead cost allocation base what implications does this have for pricing jobs much as Job 5501 XB
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