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The Hilton Company sells and services lawn mowers, snow blowers, and other equipment. The service department uses a job order cost system to determine the
The Hilton Company sells and services lawn mowers, snow blowers, and other equipment. The service department uses a job order cost system to determine the costs associated with each job for services such as oil changes, tune-ups, and repairs. The department assigns overhead costs through a cost recovery rate on the basis of direct labor hours. The customer's invoice includes the costs for parts and labor, assigned overhead costs, and a 15% markup on total job costs in order to provide a reasonable profit for Hilton. Hilton Company's service department estimated the following information for the current year: Wages of mechanics 270.000 General and administrative 36,000 Depreciation on equipment and tools 54,000 Billable direct labor hours 6,000 Required: a) (4 points) Determine Hilton Company's recovery rate for charging overhead costs. Enter your answer here. b) (6 points) Job 123 required 52 of materials and 0.8 direct labor hours. Determine the price charged to the customer for Job 123. Enter your answer here. c) (7 points) Explain how the numbers in b) can be useful for Hilton's managers. Enter your answer here
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