Shotter Manufacturing Is a Small Textile Manufacturer Using Machine-Hours to Calculate

question 191

Essay

Shotter Manufacturing is a small textile manufacturer using machine-hours to calculate the single indirect-cost rate to allocate manufacturing overhead costs to various jobs contracted during the year.The following estimates are provided for the coming year for the company and for the jackets to be made for Jackson High School Science Olympiad.
$\begin{array}{lrl}&\text { Company }&\text { Jackson High School Job }\\\text { Direct materials } & \$ 25,000 & \$ 600 \\\text { Direct manufacturing labor } & \$ 5,000 & \$ 150 \\\text { Manufacturing overhead costs } & \$ 30,000 & \\\text { Machine-hours (mh) } & 50,000 \mathrm{mh} & 800 \mathrm{mh}\end{array}$ Required:
a.For Shotter Manufacturing,determine the annual manufacturing overhead cost-allocation rate.
b.Determine the amount of manufacturing overhead costs allocated to the Jackson High School job.
c.Determine the estimated total manufacturing costs for the Jackson High School job.

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Definitions:

Goods

Tangible items that are manufactured or produced for sale and use, often referring to items of merchandise or inventory.

Right of Return

The right of return is a policy that allows customers to return purchased goods within a specified period for a refund, exchange, or credit.

Sales Revenue

Income earned from the sale of goods or services before any expenses are deducted.

Refund Liability

Refund liability refers to the obligation a company has to return money to its customers for products or services that were returned, canceled, or unsatisfactory.