Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:         Direct labor-hours required to support estimated production   75,000 Machine-hours required to support estimated production   37,500 Fixed manufacturing overhead cost $ 225,000 Variable manufacturing overhead cost per direct labor-hour $ 1.60 Variable manufacturing overhead cost per machine-hour $ 3.20     During the year, Job 550 was started and completed. The following information is available with respect to this job:         Direct materials $ 178 Direct labor cost $ 225 Direct labor-hours   15 Machine-hours   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: a. 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. Assume that Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach: a. 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? (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.)

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:

 

     
Direct labor-hours required to support estimated production   75,000
Machine-hours required to support estimated production   37,500
Fixed manufacturing overhead cost $ 225,000
Variable manufacturing overhead cost per direct labor-hour $ 1.60
Variable manufacturing overhead cost per machine-hour $ 3.20
 

 

During the year, Job 550 was started and completed. The following information is available with respect to this job:

 

     
Direct materials $ 178
Direct labor cost $ 225
Direct labor-hours   15
Machine-hours   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:

a. 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. Assume that Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:

a. 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?

(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.)

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