Question
The Red Mill Inn has contracted with a local flooring company to replace the floor in its grand room where the guests relax during evening
The Red Mill Inn has contracted with a local flooring company to replace the floor in its grand room where the guests relax during evening hours. The flooring company has measured the room and has estimated the following direct costs: Direct Materials: 600 square feet @ $8 per square foot Direct Labor: 2 workers, 10 hours each, @ $17 per hour each The flooring company estimated its overhead costs for the year to be $220,000. It allocates overhead to jobs based on direct labor hours. The company estimated its direct labor hours for the year to be 16,000 hours
a) What was the predetermined overhead rate for the year?
b) How much overhead was charged to the Red Mill Inn job?
c) What was the total cost of the Red Mill Inn job? DM DL OH Total cost
d) If the flooring company charges an amount equal to 35% above its cost, what would be the amount charged to the Red Mill Inn? Cost Profit Bid
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