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 48,000 direct labor-hours, total fixed manufacturing overhead cost of $307,200, and a variable manufacturing overhead rate of $2.80 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%.

Answer 1

$234.24 per unit

Step-by-step explanation:

The computation of the selling price for Job X941 is shown below:

But before that following calculations need to be determined

The Predetermined overhead rate is

= Variable overhead per DLH + Fixed overhead per DLH

= $2.80 + ($307,200 ÷ 48,000)

= $9.2 per DLH

Now the Total cost of Job X941 is

= Direct materials + Direct labor + Overhead applied

= $600 + $6,400 + (300 × $10)

= $9,760

And, finally

The Selling price per unit of Job X941 is

= Unit product costs × 120%

= ($9,760 ÷ 50) × 120%

= $234.24 per unit