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 .
Fixed manufacturing overhead cost.
Variable manufacturing overhead cost per direct labor-hour
1,00,000
. $5,60,000
$2.00
During the year, Job # 550 was started and completed. The following information is available
with respect to this job:
Direct materials
Direct labor cost
Direct labor-hours
$275
$250
20
Requirements:
Assume that Landen has historically used a plantwide predetermined overhead rate with direct
labor-hours as the allocation base.
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?
