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Lindsay Company Uses Activity-Based Costing to Figure Product Cost

Question 139

Essay

Lindsay Company uses activity-based costing to figure product cost. Three activities have been determined and rate calculated.
Setting up equipment = $500 per setup
Moving goods = $20 per move
Machining = $4 per machine hour
Lindsay provided the following data from the job order cost sheet for Job #550:
Direct materials $2,000
Direct labour $1,800
Setups 1
Moves 30
Machine hours 900
A. Calculate the manufacturing overhead applied to Job #550.
B. Calculate the total cost of Job #550.
C. Assuming sales price is calculated by applying a 30% markup on cost, calculate the sales price for Job #550
D. Assume Job #550 required 2 setups, 15 moves, and 700 machine hours. Calculate the manufacturing overhead applied to Job #550.
E. Assuming a 50% markup on cost, calculate the sales price of Job #550 using the manufacturing overhead rate calculated in part D

Correct Answer:

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A. Manufacturing overhead applied = ($50...

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