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P2. Robinson Manufacturing Company currently is assigning factory overhead cost to jobs based upon direct labor hours. Company is setting its sales prices for
P2. Robinson Manufacturing Company currently is assigning factory overhead cost to jobs based upon direct labor hours. Company is setting its sales prices for the jobs based on the cost of the job. Specifically, the price is "Cost+120% of Cost. Due to dissatisfaction of some of the company customers with the prices charged, Robinson's management has hired you to study the issue and make a recommendation. For this purpose, Company has compiled the data on the second Tab of the Excel file entitled "FOH Rate" including the data on two jobs as follows: Direct Material Cost Direct Labor Cost Direct Labor Hours Machine Hours Job 101 $2,500 Job 102 $480.00 $3,000 $240.00 24 165 12 270 Place the answer to the following questions of the management in the space provided on the Excel (space is highlighted in yellow). 1. Is company currently using appropriate allocation base? Why? 2. Compute cost of Job 101 and Job 102 using your recommended allocation base, assuming one allocation base is allowed for the assignment of factory overhead. 3. Compute selling price of Job 101 and Job 102 using your recommended allocation base, assuming one allocation base is allowed for the assignment of factory overhead. 4. Compute cost of Job 101 and Job 102, assuming two allocation base is allowed for the assignment of factory overhead. 5. Compute selling price of Job 101 and Job 102, assuming two allocation base is allowed for the assignment of factory overhead.
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