Question

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.

Answer 1

Step-by-step explanation:

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