Question
In: Accounting
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made...
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 120,000 Machine-hours required to support estimated production 60,000 Fixed manufacturing overhead cost $ 336,000 Variable manufacturing overhead cost per direct labor-hour $ 3.60 Variable manufacturing overhead cost per machine-hour $ 7.20 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials $ 206 Direct labor cost $ 238 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?
Solutions
Expert Solution
| Labour hours as base: | |||||
| 1. Pre-determined OH rate: | |||||
| Variable manufacturing OH per DLH | 3.6 | ||||
| Fixed Manufacturing OH per DLH | |||||
| Total fixed OH | 336000 | ||||
| Divide: Total DLH | 120000 | 2.8 | |||
| Oh rate per DLH | 6.4 | ||||
| Manufacturing cost of Job 550: | |||||
| Material | 206 | ||||
| labour | 238 | ||||
| Manufacturing OH (15 DLH @ 6.40) | 96 | ||||
| Total Manufacturing Cost of Job 550. | 540 | ||||
| Selling price of Job 550. | |||||
| Total Mannufacturing cost | 540 | ||||
| Add: Markup (540*200%) | 1080 | ||||
| Selling price of Job 550. | 1620 | ||||
| Machine Hours as Base | |||||
| 1. Pre-determined OH rate: | |||||
| Vvariable Manufacturing OH per MH | 7.2 | ||||
| Fixed Manufacturing OH per MH | |||||
| Total fixed OH | 336000 | ||||
| Divide: Total MH | 60000 | 5.6 | |||
| OH rate per MH | 12.8 | ||||
| Manufacturing cost of Job 550: | |||||
| Material | 206 | ||||
| labour | 238 | ||||
| Manufacturing OH (5 MH @ 12.80) | 64 | ||||
| Total Manufacturing Cost of Job 550. | 508 | ||||
| Selling price of Job 550. | |||||
| Total Mannufacturing cost | 508 | ||||
| Add: Markup (508*200%) | 1016 | ||||
| Selling price of Job 550. | 1524 | ||||
ekkarill92 answered 1 year agoRelated Solutions
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made...
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
140,000
Machine-hours required to support estimated production
70,000
Fixed manufacturing overhead cost
$
784,000
Variable manufacturing overhead cost per direct labor-hour
$
2.00
Variable manufacturing overhead cost per machine-hour
$
4.00
During the year, Job 550 was started and completed. The
following information is available with respect to this job:
Direct materials
$
175...
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made...
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
80,000
Machine-hours required to support estimated production
40,000
Fixed manufacturing overhead cost
$
240,000
Variable manufacturing overhead cost per direct labor-hour
$
1.80
Variable manufacturing overhead cost per machine-hour
$
3.60
During the year, Job 550 was started and completed. The
following information is available with respect to this job:
Direct materials
$
207...
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made...
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
100,000
Machine-hours required to support estimated production
50,000
Fixed manufacturing overhead cost
$
280,000
Variable manufacturing overhead cost per direct labor-hour
$
2.80
Variable manufacturing overhead cost per machine-hour
$
5.60
During the year, Job 550 was started and completed. The
following information is available with respect to this job:
Direct materials
$
216...
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made...
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
110,000
Machine-hours required to support estimated production
55,000
Fixed manufacturing overhead cost
$
308,000
Variable manufacturing overhead cost per direct labor-hour
$
3.20
Variable manufacturing overhead cost per machine-hour
$
6.40
During the year, Job 550 was started and completed. The
following information is available with respect to this job:
Direct materials
$
187...
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made...
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
95,000
Machine-hours required to support
estimated production
47,500
Fixed manufacturing overhead cost
$
266,000
Variable manufacturing overhead cost
per direct labor-hour
$
2.60
Variable manufacturing overhead cost
per machine-hour
$
5.20
During the year, Job 550 was started and completed. The
following information is available with respect to this job:
Direct materials
$
273...
8.Landen Corporation uses a job-order costing system. At the beginning of the year, the company made...
8.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
145,000
Machine-hours required to support
estimated production
72,500
Fixed manufacturing overhead cost
$
406,000
Variable manufacturing overhead cost
per direct labor-hour
$
4.40
Variable manufacturing overhead cost
per machine-hour
$
8.80
During the year, Job
550 was started and completed. The following information is
available with respect to this job:
Direct materials
$
183...
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates
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
150,000
Machine-hours required to support estimated production
75,000
Fixed manufacturing overhead cost
$
420,000
Variable manufacturing overhead cost per direct labor-hour
$
4.60
Variable manufacturing overhead cost per machine-hour
$
9.20
During the year, Job 550 was started and completed. The following information is available with respect to...
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Raw materials
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Work in process
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The company applies overhead cost to jobs on the basis of
machine-hours. For the current year, the company estimated that it
would work 37,900 machine-hours and incur $151,600 in manufacturing
overhead cost. The following transactions were recorded for the
year:
a.
Raw materials...
Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year,...
Ravsten Company uses a job-order costing system. On January 1,
the beginning of the current year, the company’s inventory balances
were as follows:
Raw materials
$
17,500
Work in process
$
9,760
Finished goods
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The company applies overhead cost to jobs on the basis of
machine-hours. For the current year, the company estimated that it
would work 36,300 machine-hours and incur $159,720 in manufacturing
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Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year,...
Ravsten Company uses a job-order costing system. On January 1,
the beginning of the current year, the company’s inventory balances
were as follows:
Raw materials
$
17,500
Work in process
$
9,760
Finished goods
$
29,280
The company applies overhead cost to jobs on the basis of
machine-hours. For the current year, the company estimated that it
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overhead cost. The following transactions were recorded for the
year:
a.
Raw materials...
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