Question

XYZ Corp. applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $65 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of a necklace. Estimates for this order include: Direct materials of $35,000; 250 direct manufacturing labor-hours at $25 per hour; and a 30% markup rate on total manufacturing costs.

Estimated total product costs for this special order equal​________

Answer 1

Total production costs= $57,500

Step-by-step explanation:

Giving the following information:

Estimated manufacturing overhead rate= $65 per direct manufacturing labor-hour.

Direct materials of $35,000

250 direct manufacturing labor-hours at $25 per hour

First, we need to allocate overhead:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 65*250= $16,250

Now, the total production costs:

Total production costs= 35,000 + 25*250 + 16,250

Total production costs= $57,500