The Aguila Company is to submit bid on the production of 10,000 ceramic salad bowls. It is estimated that the cost of materials for Molding Dept and Finishing Dept will be $7,500 and $10,100 respectively. Factory overhead is applied at $5 per direct labor hour in the Molding Dept and at 120% of the direct labor cost in the Finishing Dept.
It is estimated that 800 direct labor hours will be required in the Molding Dept and that direct labor cost in the Finishing Dept will be $4,300.
The company wishes a bid price consisting of a mark up 40% of the total production costs. Labor cost is uniform at $5 per hour.
Required:
1. Estimated cost to produce
2. Estimated prime cost
3. Estimated conversion cost
4. Bid price