Modern Cabinets has decided to price its cabinets
at 70% above cost. The problem is that they aren't
sure how to assign factory overhead. Your manager
has asked you to price the following two jobs based
on the information provided:
• Estimated factory overhead for the year:
$660,000
• Estimated direct labor hours for the year:
150,000
• Job 1 has incurred $3,000 of direct materials
and $2,000 of direct labor, which is
consistent with 200 hours of labor.
• Job 2 has incurred $3,500 of direct materials
and $3,000 of direct labor, which is
consistent with 300 hours of labor.