C11_03.xlsx shows the overhead data that
Wagner has collected for its shop for the past
52 weeks. The average weekly overhead for the
last 52 weeks is $54,208, and the average weekly
number of labor hours worked is 716. Therefore,
the normalized rate for overhead that will be used
in the upcoming week is about $76(= 54208/716)
per direct labor hour.
1. Determine whether you can develop a more
accurate estimate of overhead costs.
2. Wagner is now preparing a bid for an important
order that may involve a considerable amount of
repeat business. The estimated requirements for
this project are 15 labor hours, 8 machine hours,
$150 direct labor cost, and $750 direct material
cost. Using the existing approach to cost estimation,
Wagner has estimated the cost for this job
as $2040(= 150 + 750 + (76 × 15)). Given the
existing data, what cost would you estimate for this job?