Enjoy It Industries manufactures custom-designed playground equipment for schools and city parks. Enjoy It expected to incur $ 750 comma 600 of manufacturing overhead cost, 41 comma 700 of direct labor hours, and $ 1 comma 000 comma 800 of direct labor cost during the year (the cost of direct labor is $24 per hour). The company allocates manufacturing overhead on the basis of direct labor hours. During September , Enjoy It completed Job 302. The job used 165 direct labor hours and required $ 13 comma 900 of direct materials. The City of Southtown has contracted to purchase the playground equipment at a price of 20 % over manufacturing cost.

Question

Business

Adalyn Hill

30 October, 03:20

Enjoy It Industries manufactures custom-designed playground equipment for schools and city parks. Enjoy It expected to incur $ 750 comma 600 of manufacturing overhead cost, 41 comma 700 of direct labor hours, and $ 1 comma 000 comma 800 of direct labor cost during the year (the cost of direct labor is $24 per hour). The company allocates manufacturing overhead on the basis of direct labor hours. During September , Enjoy It completed Job 302. The job used 165 direct labor hours and required $ 13 comma 900 of direct materials. The City of Southtown has contracted to purchase the playground equipment at a price of 20 % over manufacturing cost.

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Jaylee Roach · Answer 1

The computation of the total manufacturing cost is shown below:

= Direct material used + direct labor cost + manufacturing overhead cost

where,

Direct material used = $13,900

Direct labor cost = 165 direct labor hours * $24 = $3,960

And, the manufacturing overhead cost = 165 direct labor hours * $18 = $2,970

So, the total manufacturing cost is

= $13,900 + $3,960 + $2,970

= $20,830

The $18 is come from predetermined overhead rate that is computed below:

= Expected manufacturing overhead cost : expected direct labor hours

= $750,600 : 41,700

= $18

And, the amount paid is

= Total manufacturing overhead * 100 + 20%

= $20,830 * 120%

= $24,996