Three Bears Manufacturing produces an autominus quartz watch movement called OM362. Three Bears expects to sell 20,000 units of OM362 and to have an ending finished inventory of 7,000 units. Currently, it has a beginning finished inventory of 1,200 units. Each unit of OM362 requires two labor operations, three labor hour(s) of assembling and three labor hour(s) of polishing. The direct labor rate for assembling is $14 per assembling hour and the direct labor rate for polishing is $17.50 per polishing hour. The expected cost of direct labor for OM362 is .A.$1,674,750
B.$1,567,500
C.$2,037,750
D.$ 2145000

None of the choices given. The correct answer is $2438100

The expected cost of direct labor for OM362 = $2438100

Explanation:

Three Bears Manufacturing

First we find the number of units produced.

Sales + Finished Goods Ending Inventory -  Finished Goods Beginning Inventory =  Production

20,000+7,000- 1,200 units = 25800 units

Then we find the number of hours required per unit.

Assembling Hours Required = 3* 25800 units= 77400 hours

Polishing Hours Required = 3* 25800 units=77400 hours

Now we calculate the direct labor cost both for assembling and polishing

Direct labor rate for assembling is $14 per assembling hour.

Direct labor cost for assembling =  $14*77400 hours= $ 1083600

Direct labor rate for polishing is $17.50 per polishing hour

Direct labor cost for  polishing = $17.50* 77400 hours= $ 1354500

And then we add the figures to get the total cost.

The expected cost of direct labor for OM362 = Direct labor cost for assembling +Direct labor cost for  polishing

The expected cost of direct labor for OM362 = $ 1083600 +$ 1354500

The expected cost of direct labor for OM362 = $2438100

answer; swot analysis;

answermarginal cost;