Answer and Explanation:
The computation is shown below:
1 Calculation of predetermined overhead rate is
Predetermined overhead rate= Estimated Overhead Cost ÷ Direct labor hours
= $664,000 ÷ 41,500
= $16 per direct labor hour.
Now
Calculation of Total Job Cost:-
Direct Materials $12,700
Direct Labor $3,100
(155 direct labor hours × $20 per hour)
Manufacturing Overhead $2,480
(155 direct labor hours × $16 per hour)
Total Job Cost $18,280
2- Calculation of contracted billing price:-
Total manufacturing cost of Job 301 $18,280
Add: Markup on manufacturing cost 20% of $18,280 $3,656
Billing price $21,936