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The Purple Face Mask Company is carefully examining its pricing based upon a change in product demand. Currently, the company uses a volume-based pricing system
The Purple Face Mask Company is carefully examining its pricing based upon a change in product demand. Currently, the company uses a volume-based pricing system with direct labor hours as the cost driver. They are considering a system using machine hours as the cost driver. The company estimates the following: . Estimated Total Direct Labor Hours: 125,000 Estimated Total Machine Hours: 200,000 Estimated Total Manufacturing Overhead: $5,000,000 . Each batch is produced in batches of 500 Face Masks The Batch ticket for Batch 19 for the Ladies Lavendar Masks shows the following: Batch Number 19 Direct Labor - Mask Makers Direct Material Karim - 10 hours @ $25 per hour Cloth - 20 yards @ $300 per yard Barry - 15 hours @ $25 per hour Elastic - 10 spools @ $10 per spool Jasmine - 40 hours @ $35 per hour Plastic Inserts - 60 boxes @ $25 per box Other Information: Masks produced: 500 Machine hours used: 400 machine hours Batch Number 19 Direct Labor - Mask Makers Direct Material Karim - 10 hours @ $25 per hour Cloth - 20 yards @ $300 per yard Barry - 15 hours @ $25 per hour Elastic - 10 spools @ $10 per spool Jasmine - 40 hours @ $35 per hour Plastic Inserts - 60 boxes @ $25 per box Other Information: Masks produced: 500 Machine hours used: 400 machine hours Use the information above to answer questions 1 through 4. Show and label all of your work, identifying all portions of the cost (round to the nearest penny). The use of cost sheets is optional. Question 1 10 pts What is the predetermined overhead rate if direct labor hours are used to allocate manufacturing overhead? (Be sure to upload your spreadsheet or job cost sheets that shows your work to receive credit) Round to the nearest penny - your answer should be in the form: $99.99 per..... Question 2 25 pts Compute the cost of one face mask using direct labor hours to allocated manufacturing overhead. (Be sure to upload your spreadsheet or job cost sheets that shows your work to receive credit) Round to the nearest penny - your answer should be in the form: $99.99
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