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 production145,000Machine-hours required to support estimated production72,500Fixed manufacturing overhead cost$ 406,000Variable manufacturing overhead cost per direct labor-hour$ 4.40Variable manufacturing overhead cost per machine-hour$ 8.80

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

Direct materials$ 183Direct labor cost$ 295Direct labor-hours15Machine-hours5

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.

1. Direct labor-hours:1a. Predetermined overhead rateper DLH1b. Total manufacturing cost of Job 5501c. Selling price2. Machine-hours:2a. Predetermined overhead rateper MH2b. Total manufacturing cost of Job 5502c. Selling price