ALICE is an accountant that was given a task by her boss, Craig, the CFO to calculate the standard cost of the company for the upcoming year 2010. The following past information for Wawadoo Co. was given to her to try and calculate the standard cost for Wawadoo's product called the widget.
Direct Labor-2009
AVg. Labor Hours= 1,960 hours per employee
Avg. Hourly Wage - $10
Number of employees = 47
Total Costs= $92,120
Direct Materials-2009
Material Units=20,000
Avg. Market Price= $20
Total Cost= $400,000
Overhead-2009
Fixed Salary per Manager= $80,000
Number of Managers= 5
Number of Machine hours= 1,000
Hourly Machine rate= $2
Total Cost=$410,000
Jenny's Boss, Craig, believes that the overall demand for widgets will increase by 5% and the price and number of units needed will increase by the same amount. He also believes that there will be a need for 8 new employees as well as a new manager.
Find the total standard cost for the year