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: Recently, Job T687 was completed with the following characteristics:
If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $81.60
B) $305.60
C) $285.60
D) $241.50

Question

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:  Recently, Job T687 was completed with the following characteristics:
 If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) $81.60 
B) $305.60 
C) $285.60 
D) $241.50

Quizplus · Accepted Answer

First, we need to calculate the total manufacturing cost of Job T687:

Direct materials cost = $1,200 + $1,800 = $3,000
Direct labor cost = 150 hours x $16 per hour = $2,400
Manufacturing overhead cost = 150 machine-hours x $40 per machine-hour = $6,000

Total manufacturing cost = $3,000 + $2,400 + $6,000 = $11,400

Next, we need to add the markup of 40% to the total manufacturing cost:

Total cost with markup = $11,400 x 1.4 = $15,960

Finally, we can calculate the selling price for one unit in Job T687, which used a total of 300 machine-hours:

Selling price per unit = $15,960 / 300 units = $53.20 per unit

Therefore, the selling price for a unit in Job T687 is closest to $285.60 (which is $53.20 x 5 units in the job). The correct choice is C.

Lupo Corporation Uses a Job-Order Costing System with a Single