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Lupo 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 the following data: Total machine-hours 32,300 Total fixed manufacturing overhead cost$581,400 Variable manufacturing overhead per machine-hour$2.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 40 Direct materials$630 Direct labor cost$1,260 If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to

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ayokenny2001

Answer:

See below

Explanation:

Given the above information, first we will calculate the overhead rate

Overhead rate = Cost of manufacturing overhead / Cost driver

= $581,400 / 32,300

= $18

Then,

Predetermined overhead rate = $18 fixed + $2 variable = $20

Now, we will apply this to job machine hours

Job machine hours 40

Overhead: Machine hours x

Predetermined rate = 40 × $20 = $80

Total cost = $630 + $1,260 + $880 = $2,770

The unit cost would be

= Total cost / Units

= $2,770 / 10

= $277

The selling price would therefore be;

Selling price : 40% over product cost

Selling price = Cost + 40% cost

Selling price = $227 + 40%($227)

Selling price = $227 + $90.8

Selling price = $317.8

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