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The company estimates that it will have 32,000 direct labor hours in total for the kitchen cabinets. The materials include $2,000 for the wood and...
The company estimates that it will have 32,000 direct labor hours in total for the kitchen cabinets.
The materials include $2,000 for the wood and other materials on a per job basis. It requires 40 hours of
labor on average for a custom kitchen. The hourly rate is $10. The sales price will be set at a markup of
80%.
It assumes 800 units are sold on average per year.
Prepare a Job Order Cost sheet for the following custom kitchen: Materials $5,500 and 60 hours of labor. What is the customer price?
What other factors would impact the sales price for this type of company? Can a company rely on setting price based on just a % on cost?
