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7 February, 11:13

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 Direct labor cost $ 225 Direct labor-hours 15 Machine-hours 5

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  1. 7 February, 13:54
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    Instructions are listed below.

    Explanation:

    Giving the following information:

    Direct labor-hours = 140,000

    Machine-hours = 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

    Job 550;

    Direct materials $ 175

    Direct labor cost $ 225

    Direct labor-hours 15

    Machine-hours 5

    We need to calculate the total cost of Job 550. First, we need to calculate the predetermined overhead rate:

    Estimated manufacturing overhead rate = total estimated overhead costs for the period / total amount of allocation base

    Based on direct labor hour:

    Estimated manufacturing overhead rate = 784,000/140,000 = $5.6 per direct labor hour

    Based on machine hour:

    Estimated manufacturing overhead rate = 784,000/70,000 = $11.2

    Now, we can calculate the total cost:

    Total cost = direct material + direct labor + allocated overhead

    Based on direct labor hour:

    Total cost = 175 + 225 + 5.6*15 = $484

    Based on machine hours:

    Total cost = 175 + 225 + 11.2*5 = $456
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