Question

Playtime Industries manufactures​ custom-designed playground equipment for schools and city parks. Playtime expected to incur $ 586 comma 600 of manufacturing overhead​ cost, 41 comma 900 of direct labor​ hours, and $ 1 comma 592 comma 200 of direct labor cost during the year​ (the cost of direct labor is ​$38 per​ hour). The company allocates manufacturing overhead on the basis of direct labor hours. During May​, Playtime completed Job 304. The job used 190 direct labor hours and required $ 14 comma 800 of direct materials. The City of Jonestown has contracted to purchase the playground equipment at a price of 28 % over manufacturing cost.Requirements:1. Calculate the manufacturing cost of Job 304.2. How much will the City of Jonestown pay for this playground equipment?

Answer 1

Answer:

Total cost= $24,680

Selling price= $31,590.4

Explanation:

Giving the following information:

Estimated overhead costs= $586,600

Estimated direct labor hours= 41,900

Estimated direct labor costs= $1,592,200 (​$38 per​ hour)

Job 304:

The job used 190 direct labor hours

$14,800 of direct materials.

The City of Jonestown has contracted to purchase the playground equipment for 28% over manufacturing cost.

First, we need to calculate the predetermined overhead rate:

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

Predetermined manufacturing overhead rate= 586,600/41,900

Predetermined manufacturing overhead rate= $14 per direct labor hour

Now, total cost of Job 304:

Total cost= direct material + direct labor + allocated overhead

Total cost= 14,800 + (38*190) + (14*190)

Total cost= $24,680

Finally, the selling price:

Selling price= 24,680*1.28= $31,590.4