HH Auto Repair reports the following information for the coming year. Direct labor rate, including fringe benefits . $36 per DLH Annual direct labor hours 10,000 hours Annual direct materials (parts) purchases $2,000,000 Annual overhead costs: Materials purchasing, handling, and storage $360,000 Non-materials related overhead (depreciation, insurance, taxes, rent) . $170,000 Target profit margin (on both labor and materials) 32% 1. Compute the rate per hour of direct labor (in $). 2. Compute the materials markup (in %). 3. What price should the company quote for a job requiring four direct labor hours and $580 in parts?
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
HH Auto Repair reports the following information for the coming year.
Direct labor rate, including
Annual direct labor hours 10,000 hours
Annual direct materials (parts) purchases $2,000,000
Annual
Materials purchasing, handling, and storage $360,000
Non-materials related overhead (
Target profit margin (on both labor and materials) 32%
1. Compute the rate per hour of direct labor (in $).
2. Compute the materials markup (in %).
3. What price should the company quote for a job requiring four direct labor hours and $580 in parts?
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