Wellington Recycling recycles newsprint, cardboard, and so forth, into received packaging materials. For the coming year, Wellington estimates total manufacturing overhead to be $359,640. The managers are not sure if direct labor hours (estimated to be 9,990) or machine hours (estimated to be 7,982 hours) is the best allocation base to use for allocating manufacturing overhead. Wellington bids for jobs a 31 % markup over total manufacturing cost.

After the new fiscal year began, Hollings Paper Supply asked Wellington Recycling to bid for a job that will take 1 ,975 machine hours and t ,700 direct labor hours to produce. The direct labor cost this will be $10 per hour, and the direct materials will total S25,500.

Required:
Compute the total job cost and price if Wellington decided to use direct labor hours as the manufacturing overhead allocation base for the year.

Question

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andromache andromache · Answer 1 · 2020-10-03T03:55:18+02:00

Answer and Explanation:

The computation is shown below:

But before that first determine the predetermined overhead cost which is

= Estimated total manufacturing cost ÷ estimated labor hours

= $359,640 ÷ $9,990

= $36 per hour

Now the total cost is

= Direct material + direct labor + manufacturing overhead

= $25,500 + 1,700 × $10 + $1,700 × $36

= $25,500 + $17,000 + $61,200

= $103,700

Now the bid price is

= Job cost - markup profit

= $103,700 - $103,700 × 31%

= $103,700 - $32,147

= $135,847

tallinn tallinn · Answer 2 · 2022-02-04T14:06:03+01:00

To calculate the total Job Cost, it is required to add direct Materials with direct Labor and applied overhead.

Although when before that first determine the predetermined overhead cost which is

Then = Estimated total manufacturing cost ÷ estimated labor hours

Then = $359,640 ÷ $9,990

After that = $36 per hour

Now the total cost is

Now the bid price is

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