Question 3

Anchor Homes Ltd manufactures modular homes. The company has two main products that it sells commercially: a 1,000 square foot, one-bedroom model and a 1,500 square foot, two- bedroom model. The company recently began providing emergency housing (huts) to Emergency Management Australia (EMA). The emergency housing is similar to the 1,000 square foot model.

EMA has requested Anchor Homes Ltd to create bid for 150 emergency huts to be sent for flood victims in the east. Your boss has asked that you prepare bid. In preparing the bid, you find a recent invoice to EMA for 200 huts provided after tropical cyclone Debbie. You also have a standard cost sheet for the 1,000 square foot model sold commercially. Both are provided as follows:

Standard cost sheet: 1,000 sq. ft. one-bedroom model Direct materials $8,000 Direct manufacturing labour (30 hours) Manufacturing overhead\" ($3 per direct labour dollar) 1,800 Total cost $10,400 Retail markup on total cost Retail price $12,480 *Overhead cost pool includes inspection labour ($15 per hour), setup labour ($12 per hour), and other indirect costs associated with production. INVOICE: DATE: September 15, 2017 BILL TO: EMA FOR: 200 Emergency Huts SHIP TO: Townsville, Queensland Direct materials $1,840,000 Direct manufacturing labour * * 138,400 Manufacturing overhead 415,200 Total cost 2,393,600 Government contract markup on total cost 15% Total due $2,752,640 * *Direct manufacturing labour includes 28 production hours per unit, 4 inspection hours per unit, and 6 setup hours per unit