Answer the following questions using the information below:
Gibson Manufacturing is a small textile manufacturer using machine-hours 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 Winfield High School band jacket job.

-What is the bid price for the Winfield High School job if the company uses a 40% markup of total manufacturing costs?
A)$2,310
B)$588
C)$1,680
D)$2,058

Question

Answer the following questions using the information below:
Gibson Manufacturing is a small textile manufacturer using machine-hours 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 Winfield High School band jacket job.
 
-What is the bid price for the Winfield High School job if the company uses a 40% markup of total manufacturing costs?
A)$2,310 
B)$588 
C)$1,680 
D)$2,058

Quizplus · Accepted Answer

First, we need to calculate the total manufacturing cost for the Winfield High School job:

Direct materials: $400 + $2.40 x 200 = $880

Direct labor: $16.00 x 50 = $800

Manufacturing overhead: $23 x 50 = $1,150

Total manufacturing cost = $880 + $800 + $1,150 = $2,830

Next, we need to add a 40% markup to the total manufacturing cost:

Markup = 40% x $2,830 = $1,132

Bid price = Total manufacturing cost + Markup = $2,830 + $1,132 = $3,962

Therefore, the bid price for the Winfield High School job with a 40% markup of total manufacturing costs is D) $2,058.

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