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 dа ta: Total machine-hours 32,600 Total fixed manufacturing overhead cost $ 195,600 Variable manufacturing overhead per machine-hour $ 4.00 Recently, Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 30 Direct materials $ 550 Direct labor cost $ 1,100 If the company marks up its unit product costs by 40% then the selling price for a unit in Job T687 is closest to:

Selling price = $273

Explanation:

Giving the following information:

The company based its predetermined overhead rate for the current year on the following dа ta: Total machine-hours 32,600 Total fixed manufacturing overhead cost $ 195,600 Variable manufacturing overhead per machine-hour $ 4.00.

Job T687 was completed with the following characteristics: Number of units in the job 10 Total machine-hours 30 Direct materials $ 550 Direct labor cost $ 1,100

First, we need to calculate the estimated manufacturing overhead rate we need to use the following formula:

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

Estimated manufacturing overhead rate = (195,600/32,600) + 4 = $10 per machine hour

Now, we need to calculate the total cost per unit:

Unitary cost = direct material + direct labor + allocated overhead

Unitary cost = (550/10) + (1,100/10) + (10*30) / 10 = $195

Selling price = 195*1.4 = $273