Question

Steve Hannon, sales manager, has received an order for 250 stairways from Community Builders, Inc., a large housing development contractor, At Steve's request prepares cost estimates for producing components for 250 stairways so Steve can submit a contract price per stairway to Community Builders. He accumulates the following data for the production of 250 airways Direct materials Direct labor Machine hours Direct labor hours Number of purchase orders Number of material moves Number of machine setups Number of inspections Number of components Number of square feet occupied $103,800 $113,100 15,000 5,300 60 800 100 450 16,000 8,000

Answer 1

First of all we need to calculate total manufacturing cost for 250 Stairways by using direct materials, direct labor and assigned overhead costs.

	$$
Direct Materials	$103,800
Direct Labor	$113,100
Assigned Overhead	$79,460
Total Manufacturing Costs	$296,360
Number of Stairways	250
Manufacturing Cost per Stairway (Total Manufacturing Cost $296,360 / 250 Stairways)	$1,185.44

Total manufacturing cost per stairway = $1185.44

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