Question

Stanley Company installs granite countertops in customers' homes. First, the customer chooses the particular granite slab, and then Stanley measures the countertop area at the customer's home, cuts the granite to that shape, and installs it. The Flores job calls for direct materials of $2,600 and direct labor of $700, Overhead is applied at the rate of 160 percent of direct labor cost. Unfortunately, one small countertop breaks during instaliation and Stanley must cut another plece and install it to properly complete the job. The additional rework required direct materials costing $900 and direct labor costing $250. Assume that the spollage was due to the inherently fragile nature of the piece of stone picked out by the Flores family. Staniey had warned them that the chosen plece could require much more care and potentially additional work. As a result, Stanley considers this spoilage to be caused by the Flores' job. Calculate the cost of the Fiores job.

Answer 1

The total cost of the Flores job at Stanley Company, including the original installation and additional rework due to spoilage, is $5,970. This accounts for both initial and rework costs of direct materials, direct labor, and overhead applied at 160% of the direct labor cost.

Step-by-step explanation:

To calculate the total cost of the Flores job for Stanley Company, we need to factor in both the initial costs and the costs incurred due to the rework of the spoiled countertop.

• Initial direct materials: $2,600
• Initial direct labor: $700
• Rework direct materials: $900
• Rework direct labor: $250

Overhead is applied at 160% of direct labor cost. So, the initial overhead is 160% of the initial labor cost, and the overhead for rework is 160% of the rework labor cost.

• Initial overhead: 160% of $700 = $1,120
• Rework overhead: 160% of $250 = $400

Adding these costs together gives us the total cost for the Flores job:

• Total initial costs: $2,600 (direct materials) + $700 (direct labor) + $1,120 (overhead) = $4,420
• Total rework costs: $900 (direct materials) + $250 (direct labor) + $400 (overhead) = $1,550
• Total cost of Flores job: $4,420 (initial) + $1,550 (rework) = $5,970