Three Bears Manufacturing produces an autominusquartz watch movement called OM36

Question

Three Bears Manufacturing produces an autominusquartz watch movement called OM362. Three Bears expects to sell 19,000 units of OM362 and to have an ending finished inventory of 7,000 units. Currently, it has a beginning finished inventory of 1,300 units. Each unit of OM362 requires two labor operations,three labor hour(s) of assembling and threelabor hour(s) of polishing. The direct labor rate for assembling is $13.00 per assembling hour and the direct labor rate for polishing is$14.50per polishing hour.

The expected cost of direct labor for OM362 is ________.

A.

$1,674,750

B.

$1,567,500

C.

$2,037,750

D.

$ 2145000

Explanation / Answer

C.$2,037,750.

first let us know the number of units to be produced in the coming month

=> number of units to be produced = sales + closing inventory - opening inventory

=>19,000 + 7,000 - 1,300

=>24,700.units.

now,

this 24,700 units.

require 3 labour hours each of assembling

=>24,700 * 3 =>74,100 assembling hours

they also require 3 hours each of polishing

=>24,700*3=>74,100 polishing hours.

labour cost = (74,100 * $13.00 per assembling hour) + (74,100 * $14.50 per polishing hour).

=>$2,037,750.

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