Question

# Mcewan Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on...

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 26,000 direct labor-hours, total fixed manufacturing overhead cost of \$195,000, and a variable manufacturing overhead rate of \$2.10 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 400 Direct materials \$ 800 Direct labor cost \$ 7,000

Required:

Calculate the selling price for Job X941 if the company marks up its unit product costs by 20%.

i.e. = \$ 2.10 per Direct Labor Hour + (\$ 1,95,000 / 26,000)

i.e. = \$ 9.60 per Direct Labor Hour is the predetermined overhead rate.

Calculation of selling price for Job X941 can be done as follows :

 Particulars Amount (in \$) Direct Material Cost 800 Direct Labor Cost 7,000 Total Overhead absorbed (9.60 * 400) 3,840 Total Cost 11,640 Add : Markup on Cost @ 20% 2,328 Selling Price for Job X941 13,968

Hence, the selling price for Job X941 if the company marks up its unit product costs by 20% is \$ 13,968. Per unit Cost comes at \$ 13,968 / 50 = \$ 279.36 per unit