The file
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.
Questions
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?
