Problem - Egger Manufacturing (Company) is a small bookbinder using machine-hours (mh) as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the Company and for the Sweeny Book Publisher.
Company Sweeny Job
Direct materials $40,000 $1,000
Direct labor $10,000 $200
Manufacturing overhead costs $30,000
Machine-hours 100,000 mh 900 mh
Required:
a. For Egger Manufacturing, what is the annual manufacturing overhead cost-allocation rate?
b. What amount of manufacturing overhead costs will be allocated to this job?
c. What is the bid price for the Sweeny job if the company uses a 40% markup of total manufacturing costs?