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Question - Alvin Kamara runs a mobile pet grooming service. He charges $26 direct labor per grooming hour. He applies overhead to jobs on the basis of grooming hours. He predicts 900 grooming hours for the year. Her estimated overhead costs for the year follow.
Van depreciation $8,800 van insurance expense $1,100 Tool depreciation $450
Van maintenance 1,400 indirect materials 700 other overhead 1,050
1. Compute the predetermined overhead rate using estimated grooming hours
2. Alvin has been asked to groom 3 large dogs. He expects this job to require a total of 15 direct labor grooming hours. Compute her total cost (direct labor plus applied overhead) for this job.
If Alvin targets a markup of 20% on the total cost for each job, what price should he quote for the job in part 2?
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