Question

Three Bears Manufacturing produces an autominus−quartz watch movement called OM362. Three Bears expects to sell 19,000 units of OM362 and to have an ending finished inventory of 7,000 units.​Currently, it has a beginning finished inventory of 1,300 units. Each unit of OM362 requires two labor​ operations,three labor​hour(s) of assembling and threelabor​ hour(s) of polishing. The direct labor rate for assembling is $13.00 per assembling hour and the direct labor rate for polishing is$14.50per polishing hour.The expected cost of direct labor for OM362 is​ ________.A.$1,674,750B.$1,567,500C.$2,037,750D.$ 2145000

Answer 1

Answer:

Total direct labor cost= $2,037,750

Explanation:

Giving the following information:

Sales= 19,000 units

Ending finished inventory= 7,000 units

Beginning finished inventory= 1,300 units

OM362:

Assembling= 3 direct labor hours at $13 per hour

Polishing= 3 direct labor hours at $14.5 per hour

First, we need to calculate the total production in units:

Production= sales + desired ending inventory - beginning inventory

Production= 19,000 + 7,000 - 1,300= 24,700 units

We will calculate the cost of each operation and then the total cost:

Assembling= (24,700*3hours)*13= $963,300

Polishing= (24,700*3hours)*14.5= $1,074,450

Total cost= $2,037,750