Question

The (M) signifies a manufactured part. The (P) signifies a purchased part. The cost of level 9 parts are assembled to make level 8 cost. The level 8 costs are combined to make level 7. Levels 7 and 8 are manufactured parts. This is referred to as rolling the cost. You always start at the bottom and develop your cost to level 0. Once you reach level 0 costing for this product is complete.

Widget-Product Structure

Level       Source       Quantity      Part Number       Material      Labor       Overhead       Total

0                   M                  1                01                                         

1                 M                   1                   A1

2                 P                     1                      A2

2                 P                    1                       A3                                                                                

1                 M                      1                   B1

2                 P                     1                       B2

2                   P                      2                       B3

1                M                       1                   C1

2                P                      1                       C2

2                P                      2                       C3

Part Number                                                                      Unit Cost

A2                                                                                           .35

A3                                                                                           .40

B2                                                                                           .20

B3                                                                                           .30

C2                                                                                           .15

C3                                                                                           .25

Labor rate per hour is $15.00.

Assembly time from industrial engineering is .012 hours per assembly.

Factory overhead rate is 150% of labor cost.

Answer 1

Level Source Quantity Part Number Material Labor Overhead Total 101 0M 1.98 2.20 2.97 7.15 1 м 1 A1 0.36 1.65 0.75 0.54 2P 1A2 0.35 0.18 0.27 0.80 2P 1A3 0.18 0.27 0.40 0.85 1 M 0.54 1 В1 0.80 0.81 2.15 2P 1B2 2 B3 0.20 0.18 0.27 0.65 2 P 0.60 0.36 0.54 1.50 1 M 1 C1 0.81 0.65 0.54 2.00 0.27 2 P 1C2 0.15 0.18 0.60 2P 0.36 2 C3 0.50 0.54 1.40

Calculation for per unit Cost of Assembly from level 2 to Level 1 Part Number Material Cost Labor Cost Overhead 0.27 A2 0.35 0.18 0.18 A3 0.4 0.27 0.27 B2 0.2 0.18 0.27 ВЗ 0.3 0.18 0.27 C2 0.15 0.18 0.27 СЗ 0.25 0.18 Example: calculation for B1 Part Number Material Cost Labor Cost Overhead B2 (1) В3 (2) 0.27 Values in bracket represent mumber of units 0.2 0.18 0.54 0.6 0.36 B1 0.8 0.54 0.81

Calculation for per unit Cost of Assembly from level 1 to Level 0 Material Total Cost of Level 2 Products 0.18 per assembly plus Labour costs of Level 2 Products 0.27 per assembly plus Labour costs of Level 2 Products Labour Overhead Example: calculation for 01 Part Number Material Cost Labor Cost Overhead A1 (1) B1 (1 C1 (1) For Assembling these 3 units 0.54 Values in bracket represent number of units 0.75 0.36 0.80 0.54 0.81 0.81 0.65 0.54 0.54 0.81 2.20 2.97 1.98 10. Total 7.15 Labor rate per hour is $15.00 Assembly time from industrial engineering is .012 hours per assembly Factory overhead rate is 150% of labor cost

Labor rate per assembly = 0.012 hour per assembly X $ 15 per hour = $ 0.18 per assembly.

factory Overhead per assembly = Labor rate per assembly x 150% = $ 0.18 x 150% = $ 0.27