Joni's Kitty Supplies applies manufacturing overhead costs to products at a budgeted indirect - cost rate of $60 per direct manufacturing labor - hour. A retail outlet has requested a bid on a special order of the Toy Mouse product. Estimates for this order include: Direct materials $40,000; 500 direct manufacturing labor - hours at $20 per hour; and a 20% markup rate on total manufacturing costs. The bid price for this special order is:

Question

Jethro

Business

28 March, 01:36

Joni's Kitty Supplies applies manufacturing overhead costs to products at a budgeted indirect - cost rate of $60 per direct manufacturing labor - hour. A retail outlet has requested a bid on a special order of the Toy Mouse product. Estimates for this order include: Direct materials $40,000; 500 direct manufacturing labor - hours at $20 per hour; and a 20% markup rate on total manufacturing costs. The bid price for this special order is:

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Answers (1)

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Faith Little · Answer 1

Bid price = N96,000

Explanation:

Mark up is profit expressed as a percentage of cost. Bid price will be equal to the manufacturing cost plus the mark up profit.

Bid price is the total manufacturing cost + (20% of the manufacturing cost)

Manufacturing cost = D. materials cost + D. Labour cost + Manufacturing Overheads

Manufacturing cost = 40,000 + (500 * $20) + (500 * $60)

= 80000

Bid price = 80,000 + (20% * 80,000)

= N96,000