Answer the following questions using the information below:

Husayn Pet 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

Answer the following questions using the information below:

Husayn Pet 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:

Quizplus · Accepted Answer

The total manufacturing costs include direct materials, direct labor, and manufacturing overhead. Direct materials cost $40,000, direct labor is 500 hours at $20/hour ($10,000), and manufacturing overhead is applied at $60 per direct labor-hour for 500 hours ($30,000). Total manufacturing costs are $40,000 + $10,000 + $30,000 = $80,000. A 20% markup on $80,000 is $16,000, so the bid price is $80,000 + $16,000 = $96,000.

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