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8 March, 13:31

Cull 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 total fixed manufacturing overhead cost of $358,400, variable manufacturing overhead of $2.30 per machine-hour, and 56,000 machine-hours. The company has provided the following data concerning Job X455 which was recently completed:

Number of units in the job 10

Total machine-hours 80

Direct materials $810

Direct labor cost $1,620

If the company marks up its unit product costs by 20% then the selling price for a unit in Job X455 is closest to: (Round your intermediate calculations to 2 decimal places.)

a. $379.92

b. $63.32

c. $316.60

d. $399.92

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  1. 8 March, 14:13
    0
    The selling price for a unit in Job X455 is closest to a. $379.92

    Explanation:

    stimated 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)

    = $358,400 + ($2.30 per machine-hour * 56,000 machine-hours)

    = $358,400 + $128,800 = $487,200.

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

    = $487,200 : 56,000 machine-hours = $8.7 per machine-hour.

    Overhead applied to a particular job

    = Predetermined overhead rate * Amount of the allocation base incurred by the job

    = $8.7 per machine-hour * 80 machine-hours = $696

    Direct materials $810

    Direct labor cost $1,620

    Manufacturing overhead applied $696

    Total cost of Job X455 (a) $3,126

    Number of units (b) 10

    Unit product cost (a) : (b) $312.6

    Markup (20% * $312.6) $62.52

    Selling price $375.12
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