Analyzing Direct Costs - Essay Example

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Analyzing Direct Costs

And lastly, Quality Control and Testing has a labor rate of $10.00. When multiplied by the projected 500 labor hours this give you a total of $5,000. Adding the totals of these five jobs together we have $3,625 + $16,400 + $11,250 + $6,750 + $5,000, which is an estimated total labor cost of 43,025. I then divided this total by the total projected labor hours of 5000 to come up with the weighted average cost of $8.61 (rounded up). The direct manufacturing labor cost objective (Question 2) would be this weighted average time projected hours which is a cost objective of $43,015. To estimate the material cost for the Far-Out Products task (Question 1), I took the proposed labor hours figure of 1800 and multiplied by the $41 simple average, which comes from the total material dollars expended divided by the total labor hours for the last five projects, for a total of $73,800. Using the regression analysis (Question 2), I put the 1800 labor hours into the equation, which was determined as $24,117 + $25.74 multiplied by the labor hours. and the estimate I came up with was $70,449. To answer Question 3, the first estimate appears more accurate in relation to the data from past projects. This could be due to the fact that the r2 of .988 is not necessarily a perfect fit for the regression model, since the r2 does not equal 1, though it is very close to 1. ...Show more

Summary

Cost Accounting Questions To find the weighted-average direct manufacturing labor rate for the Perry Products data (Question 1), I multiplied each labor weight by the projected hours. The team leader has a total labor rate of $14.50 multiplied by 250 hours, which equals $3,625…
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