Executive Desk Company has decided to price its desks at 60% above cost. The problem is they are not sure how to assign factory overhead. Your manager has asked you to price the following two jobs based on the information provided using machine hours as the base:

Estimated factory overhead for the year: $750,000
Estimated direct labor hours for the year: 250,000 hours
Estimated machine hours for are: 25,000 hours
Job 1 has incurred $6,000 of direct materials and $3,000 of direct labor, which is consistent with 400 hours of labor and 30 machine hours.
Job 2 has incurred $8,000 of direct materials and $5,000 of direct labor, which is consistent with 500 hours of labor and 50 machine hours.

Answer rating: 100% (QA)

To price the jobs using machine hours as the base and assigning factory overhead we need to calculat... View the full answer