Reference no: EM133065088
Question - Classic Cabinets has a factory that produces custom kitchen cabinets. It has multiple product lines.
Materials and labor for the cabinets are determined by each job. To simplify the assignment, we will assume the following average costs.
The materials include $5,000for materials on a per-job basis.
It requires 35 hours of labor on average for a custom kitchen. The hourly rate is $15. The sales price will be set at a markup of 85%.
The company estimates that it will have 70,000 direct labor hours in total for the kitchen cabinets.
It assumes 2,000 units are sold on average per year. A breakdown of estimated yearly costs related to the kitchen cabinets follows:
Salaries- office & administrative $520,000
Salaries for factory personal $220,000
Office Rent $125,000
Factory Rent $20,000
Utilities and Misc office expenses (based on units sold) $20,000
Travel (based on units sold) $24,000
Insurance - office $12,000
Depreciation - office equipment $40,000
Depreciation for factory equipment $70,000
Advertising $20,000
Sales commissions (based on units sold) $45,000
Factory Property taxes $10,000
Maintenance for factory equipment $80,000
Required - Prepare a Job Order Cost sheet for the following custom project: Materials $8,000 and 45 hours of labor. Calculate the sales price based on your cost calculations. Do not use these numbers for any other calculation.