FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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
Direct materials
Direct labor cost
Direct labor-hours
Machine-hours
Variable manufacturing overhead cost per direct labor-hour
Variable manufacturing overhead cost per machine-hour
During the year, Job 550 was started and completed. The following information is available with respect to this job:
$ 216
$327
100,000
50,000
$ 280,000
15
5
$ 2.80
$ 5.60
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?
Note: Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal
places and all other answers to the nearest whole dollar.
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Transcribed Image Text:es 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 Direct materials Direct labor cost Direct labor-hours Machine-hours Variable manufacturing overhead cost per direct labor-hour Variable manufacturing overhead cost per machine-hour During the year, Job 550 was started and completed. The following information is available with respect to this job: $ 216 $327 100,000 50,000 $ 280,000 15 5 $ 2.80 $ 5.60 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? Note: Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar.
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