Question

18. Craven Corporation has the following estimated costs for 2019: Rent on factory building Salaries of salespersons Depreciation on factory equipment Product inspector's salary Advertising Utilities $200,000 $120,000 $100,000 $80,000 $70,000 $20,000 Craven employs two types of direct labor: Engineers (earning $100/hour) and assembly line workers (earning $20/hour). For 2019, Craven estimates it will use 4,000 engineer hours and 30,000 assembly line worker hours. If overhead is assigned to jobs based on direct labor dollars used, how much overhead will Craven assign to a job if it uses an engineer for an eight hour work day?

Answer 1

--Requirement solved with calculation

	Rent of factory building	$200,000
	Salaries of salesperson	$120,000
	Depreciation on Fac Equipment	$100,000
	Product Inspector salary	$80,000
	Advertising	$70,000
	Utilities	$20,000
A	Total estimated Overhead	$590,000
	Direct Labor cost:
	Engineers (4000 hours x $ 100)	$400,000
	Assembly line (30000 hours x $ 20)	$600,000
B	Total direct labor cost	$1,000,000
C = A/B	Overhead application rate	$0.59
D = 8 hrs x $ 100	Eight hour day Engineer labor cost	$800
E = C x D	Overhead assinged to the JOB	$472	Answer