Question
Business Accounting Classic Cabinets has a factory that produces custom kitchen cabinets. It has multiple product lines. Materials and labor for the cabinets are determined
Business
Accounting
Classic Cabinets has a factory that produces custom kitchen cabinets. It has multiple product lines.
Materials and labor for the cabinets are determined by each job. To simplify the assignment, we will assume the following average costs.
The materials include $5,000for materialson a per-job basis.
It requires 35 hours of labor on average for a custom kitchen. The hourly rate is $15. The sales price will be set at a markup of 85%.
The company estimates that it will have 70,000 direct labor hours in total for the kitchen cabinets.
It assumes 2,000 units are sold on average per year. A breakdown of estimated yearly costs related to the kitchen cabinets follows:
Salaries- office & administrative | $520,000 |
Salaries for factory personal | $220,000 |
Office Rent | $125,000 |
Factory Rent | $20,000 |
Utilities and Misc office expenses(based on units sold) | $20,000 |
Travel(based on units sold) | $24,000 |
Insurance - office | $12,000 |
Depreciation - office equipment | $40,000 |
Depreciation for factory equipment | $70,000 |
Advertising | $20,000 |
Sales commissions(based on units sold) | $45,000 |
Factory Property taxes | $10,000 |
Maintenance for factory equipment | $80,000 |
QUESTION:
Prepare a Job Order Cost sheet for the following custom project: Materials $8,000 and 45 hours of labor. Calculate the sales price based on your cost calculations. Do not use these numbers for any other calculation.
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