Cull 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 total fixed manufacturing overhead cost of $488,000, variable manufacturing overhead of $2.80 per machine-hour, and 61,000 machine-hours. The company has provided the following data concerning Job X455 which was recently completed: Number of units in the job 20 Total machine-hours 80 Direct materials $ 880 Direct labor cost $ 1,760 If the company marks up its unit product costs by 20% then the selling price for a unit in Job X455 is closest to:

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facundobuzzetti facundobuzzetti · Answer 1 · 2021-03-27T01:18:32+01:00

Answer:

Selling price= $210.24

Explanation:

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (488,000 / 61,000) + 2.8

Predetermined manufacturing overhead rate= $10.8 per machine hour

Now, we can allocate overhead to Job X455, and the total cost:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 10.8*80= $864

Total cost= 880 + 1,760 + 864

Total cost= $3,504

Finally, the unitary cost and selling price:

Unitary cost= 3,504 / 20= $175.2

Selling price= 175.2*1.2= $210.24