Problem 2-18 (Algo) Plantwide Predetermined Overhead Rates; Pricing [LO2-1, LO2-2, LO2-3]

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

Direct labor-hours required to support estimated production	120,000
Machine-hours required to support estimated production	60,000
Fixed manufacturing overhead cost	$ 336,000
Variable manufacturing overhead cost per direct labor-hour	$ 3.60
Variable manufacturing overhead cost per machine-hour	$ 7.20

During the year, Job 550 was started and completed. The following information pertains to this job:

Direct materials	$ 206
Direct labor cost	$ 238
Direct labor-hours	15
Machine-hours	5

Required:

1. Assume Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:
   1. Compute the plantwide predetermined overhead rate.
   2. Compute the total manufacturing cost of Job 550.
   3. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
2. Assume Landens controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:
   1. Compute the plantwide predetermined overhead rate.
   2. Compute the total manufacturing cost of Job 550.
   3. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?

Note: Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar.

\begin{tabular}{|l|l|l|} \hline 1. Direct labor-hours: & & \\ \hline 1a. Predetermined overhead rate & & per DLH \\ \hline 1b. Total manufacturing cost of Job 550 & & \\ \hline 1c. Selling price & & \\ \hline 2. Machine-hours: & & \\ \hline 2a. Predetermined overhead rate & & per MH \\ \hline 2b. Total manufacturing cost of Job 550 & & \\ \hline 2c. Selling price & & \\ \hline \end{tabular}