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.
-The bid price for this special order is:

Question

Quizplus · Accepted Answer

The total manufacturing cost includes direct materials ($40,000), direct labor (500 hours x $20/hour = $10,000), and manufacturing overhead (500 hours x $60/hour = $30,000). The total manufacturing cost is $80,000. With a 20% markup, the bid price is $80,000 + (20% of $80,000) = $96,000.

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