Sandy Retailers uses operational costing.A customer has requested 2000 units of a product.Sandy Retailers estimates the following will be incurred to fulfil the customer order:
$\begin{array}{ll}
\text { Total direct labour hours } &\text { 75 hours }\
\text { Direct labour cost per hour } & \text { $ \$ 25 $ per hour } \
\end{array}$

In addition,they allocate overhead based on direct labour hours.At the beginning of this year,they estimated overhead costs would total $1 000 000 and direct labour hours would be 200 000.
Required:
A. What will be the predetermined cverhead rate used during the year?
B. What will be the tatal manufacturing casts for the above customer's arder?

Question

Sandy Retailers uses operational costing.A customer has requested 2000 units of a product.Sandy Retailers estimates the following will be incurred to fulfil the customer order:
 $\begin{array}{ll}
  \text { Total direct labour hours } &\text { 75 hours }\
 \text { Direct labour cost per hour } & \text { $ \$ 25 $ per hour } \
\end{array}$
 
In addition,they allocate overhead based on direct labour hours.At the beginning of this year,they estimated overhead costs would total $1 000 000 and direct labour hours would be 200 000.
Required:
 A. What will be the predetermined cverhead rate used during the year?
B. What will be the tatal manufacturing casts for the above customer's arder?

Quizplus · Accepted Answer

The Answer of Sandy Retailers uses operational costing.A customer has requested 2000 units of a product.Sandy Retailers estimates the following will be incurred to fulfil the customer order:
 $\begin{array}{ll}
  \text { Total direct labour hours } &\text { 75 hours }\
 \text { Direct labour cost per hour } & \text { $ \$ 25 $ per hour } \
\end{array}$
 
In addition,they allocate overhead based on direct labour hours.At the beginning of this year,they estimated overhead costs would total $1 000 000 and direct labour hours would be 200 000.
Required:
 A. What will be the predetermined cverhead rate used during the year?
B. What will be the tatal manufacturing casts for the above customer's arder?

Sandy Retailers Uses Operational Costing In Addition,they Allocate Overhead Based on Direct Labour Hours