Lindsay Company Uses Activity-Based Costing to Figure Product Cost $\text { Lindsay provided the following data from the job order cost sheet for Job } \# 550 \text {. }$

question 140

Essay

Lindsay Company uses activity-based costing to figure product cost.Three activities have been determined and rate calculated.
$\begin{array}{ll}\text { Setting up equipment } & =\$ 500 \text { per setup } \\\text { Moving goods } & =\$ 20 \text { per move } \\\text { Machining } & =\$ 4 \text { per machine hour }\end{array}$
$\text { Lindsay provided the following data from the job order cost sheet for Job } \# 550 \text {. }$

$\begin{array}{lr}\text { Direct materials } & \$ 2,000 \\\text { Direct labour } & 1,800 \\\text { Setups } & 1 \\\text { Moves } & 30 \\\text { Machine hours } & 900\end{array}$
A. Calculate the overhead applied to Job #550.
B. Calculate the total cost of Job #550.
C. If price is calculated by applying a 30% markup on cost, what is the price for Job #550?
D. Assume Job #550 required 2 setups, 15 moves, and 700 machine hours. Calculate the overhead applied to Job #550.
E. Assuming a 50% markup on cost, what is the price of Job #550 using the overhead rate calculated in part D?

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Definitions:

Malpractice

The failure of a professional to provide services with the skill and care that is ordinarily provided by competent professionals, leading to harm or loss.

Third Party

In contract law, a person who may, in some way, be affected by a contract but who is not one of the contracting parties. Also called outside party.

Due Diligence

Due diligence is the investigation or exercise of care that a reasonable business or person is normally expected to take before entering into an agreement or transaction with another party.

Registration Statement

A statement required by the Securities and Exchange Commission to indicate details about a business selling securities.