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Problem 3-16 (Algol Plantwide Predetermined Overhead Rates; Pricing [LOB-1, L03-2, LOB-3] Landen Corporation uses ajoborder costing system. At the beginning of the year, the company
Problem 3-16 (Algol Plantwide Predetermined Overhead Rates; Pricing [LOB-1, L03-2, LOB-3] Landen Corporation uses ajoborder costing system. At the beginning of the year, the company made the following estimates: Direct labor-hours required to support estimated production 128,860 Machinehours required to support estimated production 58,860 Fixed manufacturing overhead cost $336,866 Variable manufacturing overhead cost per direct laborhour 5 3.66 Variable manufacturing overhead cost per machine-hour 5 7.26 During the year, Job 550 was started and completed. The following information is available with respect to thisjob: Direct materials 5 295 Direct labor cost 5 238 Direct laborhours 15 Machinehours 5 | Required: 1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct laborhours as the allocation base. Under this approach: a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. c. IfLanden uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? 2. Assume that Landen's controller believes that machinehours is a better allocation base than direct laborhours. Under this approach: a. Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. c. IfLanden uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? [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: a. Predetermined overhead rate per DLH b. Total manufacturing cost of Job 550 C. Selling price 2. Machine-hours: a. Predetermined overhead rate per MH b. Total manufacturing cost of Job 550 C. Selling price
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