Question

High Tech Manufacturing​ Inc., incurred total indirect manufacturing labor costs of $ 540 comma 000. The company is labor intensive. Total labor hours during the period were 4 comma 100. Using qualitative​ analysis, the manager and the management accountant determine that over the period the indirect manufacturing labor costs are mixed costs with only one cost driverminuslaborminushours. They separated the total indirect manufacturing labor costs into costs that are fixed ​($ 140 comma 000 based on 8 comma 100 hours of​ labor) and costs that are variable ($ 400 comma 000 )based on the number of laborminushours used. The company has estimated 7 comma 700 labor hours during the next period.What will be the total cost for the estimated 7 comma 700 ​hours? (Round any intermediary calculations to the nearest cent and your final answer to the nearest​ dollar.)

Answer 1

Answer:

$891,219.51

Explanation:

The computation of the total cost for the estimated 7 comma 700 ​hours is shown below:

= Total indirect fixed manufacturing labor costs   + total variable cost

where,

Total indirect fixed manufacturing labor costs  is $140,000

And, the total variable cost is

= Total variable cost ÷ number of total labor hours  × estimated labor hours

= $400,000 ÷ 4,100 hours × 7,700 hours

= $751,219.51

So total cost is

= $140,000 + $751,219.51

= $891,219.51

We simply added the fixed and variable manufacturing labor cost