PROBLEM 2-16 Plantwide Predetermined Overhead Rates; Pricing LO2-1, LO2–2, LO2-3 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 Machine-hours required to support estimated production Fixed manufacturing overhead cost ... Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour 140,000 70,000 $784,000 $2.00 $4.00 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials.... Direct labor cost.. $175 $225 Direct labor-hours 15 Machine-hours Required: 1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach: Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? a. с. 2. Assume that Landen's controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach: Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? Assume that Landen's controller is right about machine-hours being a more accurate overhead cost allocation base than direct labor-hours. If the company continues to use direct labor- hours as its only overhead cost allocation base what implications does this have for pricing jobs such as Job 550? a. с. ulhond Pates: Overhead 3.
PROBLEM 2-16 Plantwide Predetermined Overhead Rates; Pricing LO2-1, LO2–2, LO2-3 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 Machine-hours required to support estimated production Fixed manufacturing overhead cost ... Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour 140,000 70,000 $784,000 $2.00 $4.00 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials.... Direct labor cost.. $175 $225 Direct labor-hours 15 Machine-hours Required: 1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach: Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? a. с. 2. Assume that Landen's controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach: Compute the plantwide predetermined overhead rate. b. Compute the total manufacturing cost of Job 550. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550? Assume that Landen's controller is right about machine-hours being a more accurate overhead cost allocation base than direct labor-hours. If the company continues to use direct labor- hours as its only overhead cost allocation base what implications does this have for pricing jobs such as Job 550? a. с. ulhond Pates: Overhead 3.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 2. A,B,C need help understanding how to do the math. And I also have to put this all on a spreadsheet. Please help.
Transcribed Image Text:PROBLEM 2-16 Plantwide Predetermined Overhead Rates; Pricing LO2-1, LO2–2, LO2-3
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
Machine-hours required to support estimated production
Fixed manufacturing overhead cost ...
Variable manufacturing overhead cost per direct labor-hour
Variable manufacturing overhead cost per machine-hour
140,000
70,000
$784,000
$2.00
$4.00
During the year, Job 550 was started and completed. The following information is available
with respect to this job:
Direct materials....
Direct labor cost..
$175
$225
Direct labor-hours
15
Machine-hours
Required:
1. Assume that Landen has historically used a plantwide predetermined overhead rate with
direct labor-hours as the allocation base. Under this approach:
Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550.
If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling
price would it establish for Job 550?
a.
с.
2. Assume that Landen's controller believes that machine-hours is a better allocation base than
direct labor-hours. Under this approach:
Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550.
If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling
price would it establish for Job 550?
Assume that Landen's controller is right about machine-hours being a more accurate overhead
cost allocation base than direct labor-hours. If the company continues to use direct labor-
hours as its only overhead cost allocation base what implications does this have for pricing
jobs such as Job 550?
a.
с.
ulhond Pates: Overhead
3.
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