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		30,400
Total fixed manufacturing overhead cost	$	425,600
Variable manufacturing overhead per machine-hour	$	5.00

Recently, Job T687 was completed with the following characteristics:

Number of units in the job		10
Total machine-hours		20
Direct materials	$	590
Direct labor cost	$	1,180

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.)

Multiple Choice

• $86.00

• $247.80

• $361.00

• $301.00

Answer 1

Correct answer------------$301.

Working

Direct material	$          590.00
Direct labor	$      1,180.00
Variable manufacturing overhead applied(20 x 5)	$          100.00
Fixed manufacturing Overhead applied (20 x 14)	$          280.00
Total cost of job T687	$      2,150.00
Add: Markup (2150 x 40%)	$          860.00
Total price of job T687	$      3,010.00
Units in job T687	10
Price per unit	$          301.00

Total fixed manufacturing overhead cost	$ 425,600.00
Total machine-hours	30400
Overhead rate for fixed overhead	$            14.00