Question

Three Bears Manufacturing produces an autominus−quartz watch movement called OM362. Three Bears expects to sell 19,000 units of OM362 and to have an ending finished inventory of 7,000 units.​Currently, it has a beginning finished inventory of 1,300 units. Each unit of OM362 requires two labor​ operations,three labor​hour(s) of assembling and threelabor​ hour(s) of polishing. The direct labor rate for assembling is $13.00 per assembling hour and the direct labor rate for polishing is$14.50per polishing hour.The expected cost of direct labor for OM362 is​ ________.A.$1,674,750B.$1,567,500C.$2,037,750D.$ 2145000

Answer 1

The expected cost of direct labor for the OM362 is $2,037,750, calculated by determining the labor hours for assembling and polishing and applying the respective direct labor rates to these hours.

Step-by-step explanation:

To calculate the expected cost of direct labor for OM362 by Three Bears Manufacturing, we need to account for the labor required for each of the units expected to be sold, adjusted for the finished inventory. The units expected to be produced equal the units expected to be sold plus the desired ending finished inventory minus the beginning inventory. This gives us:

19,000 (expected sales) + 7,000 (ending inventory) - 1,300 (beginning inventory) = 24,700 (total units to be produced).

Each unit requires two labor operations: three hours of assembling and three hours of polishing. Therefore, the total labor hours required for assembling are 24,700 units X 3 hours/unit = 74,100 hours, and for polishing, it’s the same, giving us another 74,100 hours.

The direct labor costs are $13.00 per hour for assembling and $14.50 per hour for polishing. Thus, the costs will be:

Assembling: 74,100 hours X $13.00/hour = $963,300

Polishing: 74,100 hours X $14.50/hour = $1,074,450

Adding these together gives us the total direct labor cost:

$963,300 (assembling) + $1,074,450 (polishing) = $2,037,750.

Answer 2

Total direct labor cost= $2,037,750

Step-by-step explanation:

Giving the following information:

Sales= 19,000 units

Ending finished inventory= 7,000 units

Beginning finished inventory= 1,300 units

OM362:

Assembling= 3 direct labor hours at $13 per hour

Polishing= 3 direct labor hours at $14.5 per hour

First, we need to calculate the total production in units:

Production= sales + desired ending inventory - beginning inventory

Production= 19,000 + 7,000 - 1,300= 24,700 units

We will calculate the cost of each operation and then the total cost:

Assembling= (24,700*3hours)*13= $963,300

Polishing= (24,700*3hours)*14.5= $1,074,450

Total cost= $2,037,750