Question
Gibson Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during
Gibson Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Winfield High School band jacket job.
Company Winfield High School Job
Direct materials $40,000 $1,000
Direct labor $10,000 $200
Manufacturing overhead costs $30,000
Machine-hours 100,000 mh 900 mh
Required:
1.Determine the overhead cost allocation rate
2.Calculate the amount of overhead allocated to the Winfield High School Job
3.Calculate the total manufacturing costs charged to this job
4.What is the bid price for this job if Gibson uses a 40% mark-up on total manufacturing costs.
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