Question

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Gold Metal Inc., provides you with the following data for their single product: Sales price per unit Fixed Costs (per month) 61 Selling, general, and administrative (SG&A) unit Manufacturing overhead 510,3o 4,082,40 Variable costs (per unit) Direct materials Direct labor Manufacturing overhead SG&A 1: 10 1: Number of units produced per month 255,150 unit Give the amounts for each of the following: a. Prime cost per unit. b. Contribution margin per unit. c. Gross margin per unit. d. Conversion cost per unit. e. Variable cost per unit. f. Full absorption cost per unit. g. Variable production cost per unit. h. Full cost per unit. i. You are the manager and are looking at ways to reduce costs. What two costs would you first start to review? For each cost listed in part "i" name a document you would request to review for potential cost savings analysis? (Hint...1) think about the process and the associated documents to that process 2) don't get hung up on thinking of a document we discussed in class use all your knowledge of business both in school and you're current/past employment) j.

Answer 1

1. Direct Material Cost

To review Direct Material Cost, documents pertaining to Input-Output Ratio, Normal loss during production and purchase cost is compared to the market price, Ordering and carrying costs and maintaining Economic Order Quantity and keeping proper stock levels.

2. Direct Labour Cost

To review Direct Labour cost, documents pertaining to Labour timesheet records, Ideal time review and employee turnover analysis,

3. Manufacturing Overhead Costs

Comparison of Actuals with Standard, Review of major Repair and overhauling expenses, Review of Cost Drivers and its allocation to product cost.

4. Selling, general and administrative Costs

Comparison of Actuals with Standard, Basis of apportionment, Market price fluctuations and its adjustments,