Question

Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:

Total machine-hours	32,700
Total fixed manufacturing overhead cost	$294,300
Variable manufacturing overhead per machine-hour	$ 2.00

Recently, Job T687 was completed with the following characteristics:

Number of units in the job	10
Total machine-hours	20
Direct materials	$ 545
Direct labor cost	$1,090

If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Total variable overhead estimated=(32700*2)=$65400

Total overhead estimated=Total variable overhead estimated+Total fixed overhead estimated

=65400+294300=$359700

Predetermined overhead rate=Total overhead estimated/Estimated machine hours

=359700/32700

$11 per machine hour

Hence applied overhead=Predetermined overhead rate*Actual machine hours

=(11*20)=$220

Add:Direct materials=$545

Add:Direct labor=$1090

Total cost=$1855

Cost per unit=1855/10

=$185.5

Hence selling price=Cost per unit*140%

=185.5*140%

=$259.7