Problemmolton motors makes large turbo engines the company, Ask an Expert

Accounting

Problem

Molton Motors makes large turbo engines. The company manufactured a prototype engine for Apex Corporation. Cost data on that engine follow:

Direct Material $22,000
Direct labor (2,000 hrs @ $20 per hour) 40,000
Variable Mfg Overhead (based on DL cost) 24,000
Total cost $86,000

Based on experience, Molton uses an 80% learning curve (-0.3219) to calculate costs. Apex wants a quote on 15 additional motors (Molton will keep the prototype).

REQUIRED

Calculate the variable cost of producing these fifteen motors.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92753565

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