Question

Q-2) Company X produces audio equipments in its factory. Raw materials cost for an audio system is TL87 per unit. Workers on the production lines are paid TL13 per hour. An audio system takes 6 hours to complete.

In addition, the rent on the equipment used to assemble audio systems amounts to TL5,900 per month. Miscellaneous materials cost TL5 per unit produced. A supervisor was hired to oversee production and her monthly salary is TL3,000. Factory janitorial costs will be TL1,500 per month. Local TV and radio channels will charge TL9,800 for advertisements per month. The factory building depreciation expense per year will be TL7,600, and factory property tax is TL12,000 per year. Material handling costs in the factory are expected to be around TL170 per month. Calculate unit production cost if the monthly production level is 1,560 units.

Answer 1

Unit production cost if the monthly production level is 1,560 units: Particulars Amount (TL) Amount (TL) Direct Raw Materials (1.560 units * TL87 per unit) 135.720 Direct labor [6 Hours * TL13 per hour) * 1,560] 121.680 Prime Cost 257,400 Overhead costs: Rent on Equipment 5.900 Indirect Materials (1.560 units * TL5 per unit) 7.800 Supervisor Salary 3,000 Factory janitorial costs 1,500 Advertising costs 9.800 Depreciation expense (TL 7,600 / 12 Months) 633 Factory property tax (TL 12,000 / 12 Months) 1,000 Material handling costs 170 Total Overhead Costs 29.803 Total Cost for producing (a) 287,203 unit produce (b) 1,560 units unit production cost (a) (b) 184 per unit Note: Unit production cost to be rounding off nearest whole TL.