Question

Love It Industries manufactures​ custom-designed playground equipment for schools and city parks. Love It expected to incur $ 784 comma 700 of manufacturing overhead​ cost, 41 comma 300 of direct labor​ hours, and $ 1 comma 569 comma 400 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​, Love It completed Job 308. The job used 190 direct labor hours and required $ 15 comma 100 of direct materials. The City of Forest Hills has contracted to purchase the playground equipment at a price of 23 % over manufacturing cost.Calculate the manufacturing cost of Job 302

Answer 1

Answer:

Total manufacturing cost of job 302 :            $

Direct material cost                                        15,100

Direct labour cost(190hrs x $38)                  7,220

Manufacturing overhead(190hrs x $19)      3,610

Total manufacturing cost                             25,930

Overhead absorption rate = Budgeted overhead/Budgeted activity level

                                             = $784,700/41,300 hrs

                                             = $19

Explanation:

In this scenario, we need to add the direct material cost, direct labour cost and manufacturing overhead in order to obtain the total manufacturing cost. Overhead absorption rate is calculated from the company's budget provided in the question. Overhead is absorbed on direct labour hours. The direct labour hourly rate of $38 was provided in the question