Question

Frank’s Furniture company applies overhead costs to jobs on the basis of direct labor hours. The...

Frank’s Furniture company applies overhead costs to jobs on the basis of direct labor hours. The company estimates manufacturing overhead for the year to be $330,000. The company expects its direct labor workforce to work for 20,000 hours during the year.

Job #1843 shows the following cost information:

Walnut: 350 board feet used at a cost of $17 per board foot.

Labor: 300 hours at a cost of $21 per hour.

Required:

Assuming the company marks up their price to by three times the cost, what will the company charge its customer for the table?

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Answer #1
Manufacturing overhead rate = $   16.50
$330,000/20000
Computation of sales price
Material = 350*17 $        5,950
Labour = 300*21 $        6,300
Overhead = 300*16.5 $        4,950
a Total cost = $      17,200
b Mark up = 3*17200 $      34,400
c=a+b sales price $      51,600
Ans = $      51,600
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