Answer the following questions using the information below:
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.
-Estimated total product costs for this special order equal:

Question

Quizplus · Accepted Answer

To calculate the estimated total product costs for this special order, we need to first calculate the total manufacturing costs.

Total manufacturing costs = Direct materials + Direct labor + Manufacturing overhead
Total manufacturing costs = $40,000 + (500 x $20) + Manufacturing overhead
Total manufacturing costs = $50,000 + Manufacturing overhead

To calculate the manufacturing overhead, we use the budgeted indirect-cost rate of $60 per direct manufacturing labor-hour.
Manufacturing overhead = 500 x $60
Manufacturing overhead = $30,000

Total manufacturing costs = $50,000 + $30,000
Total manufacturing costs = $80,000

Adding the 20% markup, we get:

Total estimated product costs = $80,000 x 1.2
Total estimated product costs = $96,000

Therefore, the estimated total product costs for this special order is $96,000, which is option A.

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