Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates: Direct labor-hours required to support estimated production 140,000 Machine-hours required to support estimated production 70,000 Fixed manufacturing overhead cost $ 784,000 Variable manufacturing overhead cost per direct labor-hour $ 2.00 Variable manufacturing overhead cost per machine-hour $ 4.00 During the year, Job 550 was started and completed. The following information is available with respect to this job: Direct materials $ 175 Direct labor cost $ 225 Direct labor-hours 15 Machine-hours 5

Instructions are listed below.

Explanation:

Giving the following information:

Direct labor-hours= 140,000

Machine-hours= 70,000

Fixed manufacturing overhead cost $ 784,000

Variable manufacturing overhead cost per direct labor-hour $ 2.00

Variable manufacturing overhead cost per machine hour $ 4.00

Job 550;

Direct materials $ 175

Direct labor cost $ 225

Direct labor-hours 15

Machine-hours 5

We need to calculate the total cost of Job 550. First, we need to calculate the predetermined overhead rate:

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

Based on direct labor hour:

Estimated manufacturing overhead rate= 784,000/140,000= $5.6 per direct labor hour

Based on machine hour:

Estimated manufacturing overhead rate= 784,000/70,000= $11.2

Now, we can calculate the total cost:

Total cost= direct material + direct labor + allocated overhead

Based on direct labor hour:

Total cost= 175 + 225 + 5.6*15= $484

Based on machine hours:

Total cost= 175 + 225 + 11.2*5= $456