Question

Lupo 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 the following data: Total machine-hours 31,200 Total fixed manufacturing overhead cost $ 156,000 Variable manufacturing overhead per machine-hour $ 3.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 30 Direct materials $ 665 Direct labor cost $ 1,330 If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)

Answer 1

Answer:

selling price: 312.90

Explanation:

We will calculate the unit cost:

which is the sum of materials, labor and overhead.

labor: 1,330

direct materials: 665

For the fixed overhead we must determinate the overhead rate:

$\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate$

we distribute the cost among the cost driver which is machine hours:

156,000 / 31,200 = 5

5 fixed + 3 variable = 8 predetermined overhead rate

Now, we apply this to the job machine hours:

job machine hours 30

overhead: machine hours x predetermined rate = 30 x 8 = 240

total cost 1,330 + 665 + 240 overhead = 2,235

now we are able to solve for unit cost: total cost / units:

2,235 / 10 = 223.5

Last step, the selling price:

Selling price: 40% over product cost:

selling price: cost + 40% cost =  1.40cost

223.5 x 1.4 = 312.9

Answer 2

Answer:

The selling is $312.9 per unit.

Explanation:

We have the total production cost for Job T687 is equal to: Manufacturing overhead + Direct Labor + Direct material

We have:

* Manufacturing overhead = Fixed manufacturing overhead allocated to Job T687 + Variable Overhead of T687;

in which: Fixed manufacturing overhead = Predetermine allocated rate * actual machine hours run for the job = (156,000/31,200) * 30 = $150

                Variable manufacturing overhead = Variable manufacturing overhead per machine-hour * actual machine hours run for the job = 3 * 30 = $90

* Direct labor is given at $1,330; Direct material is given at $665.

=>  Total production cost for Job T687 = 150 + 90 + 1,330 + 665 = $2,235

=> Production cost per unit in the job = 2,235/10 = $223.5

=> Selling price per unit = Production cost per unit * (1 + mark-up) = 223.5 * 1.4 = $312.9.

So, the answer is $312.9.