The Shepard Company is to submit a bid on the production of 10,000 ceramic salad bowls. It is estimated that the cost of materials will be $7,500 and direct labor, $ 10,100. Factory overhead is applied at $5 per direct labor hour in the Molding Department and at 120% of the direct labor cost in the finishing Department. It is estimated that 800 direct labor hours will be required in Molding and the direct labor cost in Finishing will be $ 4,300. The company wishes a bid price consisting of a markup of 40% of its total production costs. • Required: • Estimated cost to produce • Estimated prime cost• Estimated conversion cost
The Shepard Company is to submit a bid on the production of 10,000 ceramic salad bowls. It is estimated that the cost of materials will be $7,500 and direct labor, $ 10,100. Factory overhead is applied at $5 per direct labor hour in the Molding Department and at 120% of the direct labor cost in the finishing Department. It is estimated that 800 direct labor hours will be required in Molding and the direct labor cost in Finishing will be $ 4,300. The company wishes a bid price consisting of a markup of 40% of its total production costs. • Required: • Estimated cost to produce • Estimated prime cost• Estimated conversion cost
Chapter6: Activity-based, Variable, And Absorption Costing
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The Shepard Company is to submit a bid on the production of 10,000 ceramic salad bowls. It is estimated that the cost of materials will be $7,500 and direct labor, $ 10,100. Factory overhead is applied at $5 per direct labor hour in the Molding Department and at 120% of the direct labor cost in the finishing Department. It is estimated that 800 direct labor hours will be required in Molding and the direct labor cost in Finishing will be $ 4,300. The company wishes a bid price consisting of a markup of 40% of its total production costs.
• Required:
• Estimated cost to produce
• Estimated prime cost• Estimated conversion cost
• Bid price?
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