Mcewan Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on 20,000 direct labor-hours, total fixed manufacturing overhead cost of $182,000, and a variable manufacturing overhead rate of $2.50 per direct labor-hour. Job X941, which was for 50 units of a custom product, was recently completed. The job cost sheet for the job contained the following data:?Total direct labor-hours250?Direct materials$740?Direct labor cost$6,500Required:Calculate the selling price for Job X941 if the company marks up its unit product costs by 20%.
What will be an ideal response?
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) = $182,000 + ($2.50 per direct labor-hour × 20,000 direct labor-hours) = $182,000 + $50,000 = $232,000
Predetermined overhead rate = Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base = $232,000 ÷ 20,000 direct labor-hours = $11.60 per direct labor-hour
Overhead applied to a particular job = Predetermined overhead rate × Amount of the allocation base incurred by the job = $11.60 per direct labor-hour × 250 direct labor-hours = $2,900
? | Direct materials | $740 |
? | Direct labor | 6,500 |
? | Manufacturing overhead applied | 2,900 |
? | Total cost of Job X941 | $10,140 |
? | Total cost of Job X941 (a) | $10,140 |
? | Number of units (b) | 50 |
? | Unit product cost (a) ÷ (b) | $202.80 |
? | Unit product cost for Job X941 | $202.80 |
? | Markup (20% × $202.80) | 40.56 |
? | Selling price | $243.36 |
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