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 31,200 Total fixed manufacturing overhead cost $ 156,000 Variable manufacturing overhead per machine-hour $ 3.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 30 Direct materials $ 665 Direct labor cost $ 1,330 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

Answer- The selling price for a unit in JobT687 is closest to = $312.90 per unit.

Explanation- Estimated total manufacturing overhead cost = Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base * Estimated total amount of the allocation base)

= $156000+ ($3.00 per machine-hour *31200 machine-hours)

= $156000 + $93600

= $249600

Predetermined overhead rate = Estimated total manufacturing overhead cost /Estimated total amount of the allocation base

= $249600 /31200 machine-hours

= $8 per machine-hour

Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job

= $8 per machine-hour * 30 machine-hours

= $240

Unit product cost for Job T687 = (Direct materials+ Direct labor+ Manufacturing overhead applied)/ Number of units

= ($665+$1330+$240)/10 units

= $2235/10 units

= $223.50 per unit  

Selling price for a unit in Job T687 = Unit product cost for Job T687+ Mark-up

= $223.50+ ($223.50*40%)

= $223.50 + $89.40

= $312.90