Three Bears Manufacturing produces an auto?quartz watch movement called OM362. T

Question

Three Bears Manufacturing produces an auto?quartz watch movement called OM362. Three Bears expects to sell 13,000 units of OM362 and to have an ending finished inventory of 4,000 units.? Currently, it has a beginning finished inventory of 1,100 units. Each unit of OM362 requires two labor? operations, three labor? hour(s) of assembling and one labor? hour(s) of polishing. The direct labor rate for assembling is $12.00 per assembling hour and the direct labor rate for polishing is $15.50 per polishing hour.

The expected cost of direct labor for OM362 is? ________.

A. $875,500

B. $818,850

C. $726,150

D. $669,500

Explanation / Answer

Production units = 13000+4000-1100 = 15900 units

Assembling labour cost = (15900*3*12) = 572400

Polishing labour cost = (15900*1*15.50) = 246450

Total cost of direct labour = (572400+246450) = 818850

so answer is b) $818,850

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