tmels
Oct 24, 2010, 12:29 AM
I need help with Managerial accounting problem.
the company is currently bidding on a potential order from Dacon for 7,000 Model 350 motors. The estimated cost of each motor is $55 as follows:
Direct material $25
Direct Labor $ 10
Overhead $ 20
Total $ 55
the predetermined overhead rate is $2 per direct labor dollar. This was estimated by dividing estimated annual overhead $1,000,000 by estimated annual direct labor $5,000,000. The 10,000,000 of overhead is composed of $4,000,000 of variable and 6,000,000 of fixed costs. The largest fixed costs relates to depreciation of the plant and equipment.
With respect to overhead, what is the opportunity cost of producing model 350 motor?
the company is currently bidding on a potential order from Dacon for 7,000 Model 350 motors. The estimated cost of each motor is $55 as follows:
Direct material $25
Direct Labor $ 10
Overhead $ 20
Total $ 55
the predetermined overhead rate is $2 per direct labor dollar. This was estimated by dividing estimated annual overhead $1,000,000 by estimated annual direct labor $5,000,000. The 10,000,000 of overhead is composed of $4,000,000 of variable and 6,000,000 of fixed costs. The largest fixed costs relates to depreciation of the plant and equipment.
With respect to overhead, what is the opportunity cost of producing model 350 motor?