The following cost functions were developed for manufacturing overhead costs: $$\begin{array} { l l }
\text { Manufacturing Overhead Cost } & \text { Cost Function } \\hline
\text { Electricity } & \$ 200 + \$ 20 \text { per direct labor hour } \
\text { Maintenance } & \$ 400 + \$ 30 \text { per direct labor hour } \
\text { Supervisors' salaries } & \$ 20,000 \text { per month } \
\text { Indirect materials } & \$ 16 \text { per direct labor hour }
\end{array}$$ If January production is expected to be 2,000 units requiring 3,000 direct labor hours, estimated manufacturing overhead costs would be
A)$20,733.
B)$198,000.
C)$152,600.
D)$218,600.

Question

The following cost functions were developed for manufacturing overhead costs: $$\begin{array} { l l } 
\text { Manufacturing Overhead Cost } & \text { Cost Function } \\hline
\text { Electricity } & \$ 200 + \$ 20 \text { per direct labor hour } \
\text { Maintenance } & \$ 400 + \$ 30 \text { per direct labor hour } \
\text { Supervisors' salaries } & \$ 20,000 \text { per month } \
\text { Indirect materials } & \$ 16 \text { per direct labor hour }
\end{array}$$ If January production is expected to be 2,000 units requiring 3,000 direct labor hours, estimated manufacturing overhead costs would be
A)$20,733.
B)$198,000.
C)$152,600.
D)$218,600.

Quizplus · Accepted Answer

The total manufacturing overhead cost is calculated by summing up all the costs: Electricity: $200 + ($20 * 3,000) = $60,200; Maintenance: $400 + ($30 * 3,000) = $90,400; Supervisors' salaries: $20,000; Indirect materials: $16 * 3,000 = $48,000. Total = $60,200 + $90,400 + $20,000 + $48,000 = $218,600.

The Following Cost Functions Were Developed for Manufacturing Overhead Costs