Question

Note: The subject I am taking is Cost Engineering.

Please give a step by step solution for the following problem.

Problem:

Bakery the Invincible
Determine the production cost status for the month of August according to the following data:
a.) Purchase of 250 packages of flour that is used every 15 days at a cost per package of 550 pesos.
b.) Purchase 20 boxes of butter for weekly use at a cost of 770 pesos each box.
c.) Purchase 10 boxes of yeast for weekly use at a cost of 1150 pesos per box.
d.) Purchase of sugar for weekly use, 15 packages with a cost of 450 pesos per package.
e.) Purchase of salt, 5 packages for weekly use at a cost of 150 pesos per package.
f.) Payment for 7 bakers with a daily salary of 550 pesos.
g.) Payment to the assistants of the bakery, 11 assistants with a salary of 250 pesos a day.
h.) Supervisor payment of the plant, the amount of 30,000 pesos per month.
i.) Complementary expenses were made to the production for 150,000 pesos.
j.) 65,000 pesos of social security and 20,000 pesos of other monthly insurance corresponding to workers in the plant were paid.
It is requested:
1.) Determine the cost of production of each of the elements (Raw Material, Labor, Indirect Expenses)
2.) Determine the total production cost
3.) Determine the unit cost of production, where 32,000 units were produced.
4.) Determine total sales if 25,000 units were sold with a profit margin of 140%.
5.) Determine the cost of what is sold.

Answer 1

		COST OF PRODUCTION
		FOR THE MONTH OF AUGUST
		Direct material costs:
	a)	Cost of flour	275,000	(250*550*2)
	b)	Cost of butter	61,600	(20*770*4)
	c)	Cost of yeast	46,000	(10*1150*4)
	d)	Cost of sugar	27,000	(15*450*4)
	e)	Cost of salt	3,000	(5*150*4)
		Total Direct Material Cost	412,600
		Direct labor Costs:
	f)	Payment to bakers	84,700	(7*550*22) Assuming 22 working days in the month
	g)	Payment to assistants	60,500	(11*250*22)
	j)	Social security and insurance	85,000	(65000+20000)
		Total Direct labor Cost	230,200
		INDIRECT EXPENSES
	h)	Supervisor payment	30,000
	i)	Complementary expenses	150,000
		Total Indirect expenses	180,000
		TOTAL PRODUCTION COST	822,800	(412600+230200+180000)
		UNIT COST OF PRODUCTION	25.71	(822800/32000)
		Cost of 25000 units	642,812.50	(25.71*25000)
		Profit Margin	899,937.50	(1.4*642812.50)
		TOTAL SALES	1,542,750	(642812.50+899937.50)
		COST OF WHAT IS SOLD	642,812.50