Question

Three Bears Manufacturing produces an autominus quartz watch movement called OM362. Three Bears expects to sell​ 20,000 units of OM362 and to have an ending finished inventory of​ 7,000 units.​ Currently, it has a beginning finished inventory of​ 1,200 units. Each unit of OM362 requires two labor​ operations, three labor​ hour(s) of assembling and three labor​ hour(s) of polishing. The direct labor rate for assembling is​ $14 per assembling hour and the direct labor rate for polishing is​ $17.50 per polishing hour. The expected cost of direct labor for OM362 is​ ________.A.$1,674,750
B.$1,567,500
C.$2,037,750
D.$ 2145000

Answer 1

Answer:

None of the choices given. The correct answer is $2438100

The expected cost of direct labor for OM362 = $2438100

Explanation:

Three Bears Manufacturing

First we find the number of units produced.

Sales + Finished Goods Ending Inventory -  Finished Goods Beginning Inventory =  Production

20,000+7,000- 1,200 units = 25800 units

Then we find the number of hours required per unit.

Assembling Hours Required = 3* 25800 units= 77400 hours

Polishing Hours Required = 3* 25800 units=77400 hours

Now we calculate the direct labor cost both for assembling and polishing

Direct labor rate for assembling is​ $14 per assembling hour.

Direct labor cost for assembling =  $14*77400 hours= $ 1083600

Direct labor rate for polishing is​ $17.50 per polishing hour

Direct labor cost for  polishing = $17.50* 77400 hours= $ 1354500

And then we add the figures to get the total cost.

The expected cost of direct labor for OM362 = Direct labor cost for assembling +Direct labor cost for  polishing

The expected cost of direct labor for OM362 = $ 1083600 +$ 1354500

The expected cost of direct labor for OM362 = $2438100