Question
Astro Inc. is a small textile manufacturer using machine-hours to calculate the single indirect-cost rate to allocate manufacturing overhead costs to various jobs contracted during
Astro Inc. is a small textile manufacturer using machine-hours to calculate the single indirect-cost rate to allocate manufacturing overhead costs to various jobs contracted during the year. The following estimates are provided for the coming year for the company to manufacture 1,000 jackets and for the 100 jackets to be custom made for Cinco Youth Orchestra.
Company Cinco Youth Orchestra
Direct materials $35,000 $3,600
Direct manufacturing labor $25,000 $2,700
Manufacturing overhead costs $40,000
Machine-hours (mh) 500 mh 60 mh
Required:
a. For Astro Inc. determine the annual manufacturing overhead cost-allocation rate per machine hour.
b. Determine the amount of manufacturing overhead costs allocated to the Cinco Youth Orchestra job.
c. Determine the estimated total manufacturing costs for the Cinco Youth Orchestra job.
d. Determine the estimated manufacturing costs for a jacket to be used in Cinco Youth Orchestra.
e. Determine the estimated manufacturing costs for Astro Inc. to make a jacket. Explain why the average cost of a jacket to manufacture by Astro Inc. is different from the custom made jacket for Cinco Youth Orchestra.
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