Question

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 45,000 direct labor-hours, total fixed manufacturing overhead cost of $315,000, and a variable manufacturing overhead rate of $3.80 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-hours		300
Direct materials	$	600
Direct labor cost	$	6,400

Required:

Calculate the selling price for Job X941 if the company marks up its unit product costs by 20%. (Round intermediate calculations and final answer to 2 decimal places.

Answer 1

Total variable overhead estimated=(45000*3.8)=$171000

Total overhead estimated=Total variable overhead estimated+Total fixed overhead estimated

=171000+315,000

=$486000

Predetermined overhead rate=Total overhead estimated/Estimated direct labor hours

=486000/45000

=$10.8 per direct labor hour

Total overhead applied=Predetermined overhead rate*Actual direct labor hours

=10.8*300=$3240

Add:Direct materials=$600

Add:Direct labor=$6400

Total cost=$10240

Hence total selling price=10240*1.2

=$12288

Hence selling price for Job X941 =$12288/50

=$245.76