Mighty Mac Mobile Phone Services Uses Operational Costing In Addition,Mighty Mac Allocates Overhead Based on Direct Labour Cost

question 18

Essay

Mighty Mac Mobile phone services uses operational costing.One of their customers has requested 2000 units of an identical mobile phone.Mighty Mac estimates the following will be incurred to fulfil the customer order:
$\begin{array}{ll} \text { Total direct materials } &\$100000\\ \text { Total direct labour hours } & \text {40 hours } \\ \text { Direct labour cost per hour } & \text { \$ 25 per hour }\\\end{array}$

In addition,Mighty Mac allocates overhead based on direct labour cost.At the beginning of this year,they estimated overhead costs would total $900 000 and direct labour would cost a total of $2 400 000.
Required:
A. What will be the predetermined cverhead rate used during the year?
B. What will be the tatal manufacturing casts for the above customer's arder?

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Definitions:

Elastic Demands

This refers to the sensitivity of the quantity demanded of a good to a change in its price, where a small price change leads to a larger change in quantity demanded.

Elastic Demands

A situation where the demand for a good or service significantly changes in response to changes in its price.

Close Substitutes

Products or services that can easily replace each other in the eyes of the consumer, offering similar benefits and functionalities.

Inelastic

A term describing a situation in which the quantity demanded or supplied of a good or service is relatively unresponsive to changes in price.