Alltime Industries manufactures custom-designed playground equipment for schools

Question

Alltime Industries manufactures custom-designed playground equipment for schools and city parks. Alltime expected to incur $684,000 of manufacturing overhead cost, 41,500 of direct labor hours, and $1,577,000 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 February, Alltime completed Job 302. The job used 160 direct labor hours and required $13,900 of direct materials. The City of Cooperstown has contracted to purchase the playground equipment at a price of 25% over manufacturing cost. Read the requirements. Requirement 1. Calculate the manufacturing cost of Job 302. First identify the formula, then calculate the predetermined overhead rate Predetenmined - overhead rate per hour Calculate the manufacturing cost of Job 302. Total job cost Requirement 2. How much will the City of Cooperstown pay for this playground equipment? (Round your answers to the nearest whole number.) Total price to charge =

Explanation / Answer

1 Estimated manufacturing costs/Direct labor hours = Predetermined overhead rate 664000/41500= $16 per hour Direct materials 13900 Direct labor 6080 =160*38 Manufacturing Overhead 2560 =160*16 Total job cost 22540 2 Total job cost+Markup on cost = Total price to charge 22540+5635 = $28175

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