Question

Have Fun Industries manufactures custom-designed playground equipment for schools and city parks. Have Fun expected to incur $627,000 of manufacturing overhead cost, 41,800 of direct labor hours, and $1,254,000 of direct labor cost during the year (the cost of direct labor is $30 per hour). The company allocates manufacturing overhead on the basis of direct labor hours. During November Have Fun completed Job 301. The job used 160 direct labor hours and required $15,100 of direct materials. The City of Hamptonville has contracted to purchase the playground equipment at a price of 28% over manufacturing cost. Read the requirements. Direct materials Direct labor Manufacturing overhead 15,100 4,800 2,400 22,300 Total job cost Requirement 2. How much will the City of Hamptonville pay for this playground equipment? (Round your answers to the nearest whole number.) Total price to charge

Answer 1

Total job cost = $22,300 (Given)

Mark up = 28% over manufacturing cost of the job

Hence, mark up = 22,300 x 28%

= $6,244

Total price to be charged = Cost of the job + Mark up

= 22,300 + 6,244

= $28,544

Hence, City of Hamptonville will pay for play ground equipment = $28,544

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