Question

Cost Formula The following amounts of various cost categories are experienced by Columbia Factories in producing and selling its only product: Direct material Direct labor Manufacturing overhead $12,000+ $4.00 per direct labor hour Selling expenses Administrative *Each unit of product requires one-half direct labor hour. Combine the various cost factors into a general total cost formula for Columbia Factories and determine the total cost of producing and selling 25,000 units $8.00 per unit of product $10.00 per direct labor hour* $14,000 $3.00 per unit of product $7,000 $0.50 per unit of product Fixed costs + Variable costs - Total cost Direct material $120,000 X 120,000 Direct labor 0 75,000 X 75,000 X Manufacturing overhead 12,000 30,000 X 42,000X Selling expenses 14,000 45,000 59,000 X Administrative 7,000 7,500X 14,500 X $33,000 $277,500 X 310,500 Total cost

Answer 1

Answer

All working forms part of the answer.

	Fixed Cost	Variable Costs	Total Cost
Direct Material	$0	$200,000 [25000 units x $ 8]	$200,000
Direct Labor	$0	$125,000 [25000 units x 0.5 hours per unit x $10 per hour]	$125,000
Manufacturing Overhead	$12,000	$50,000 [25000 units x 0.5 hours per unit x $ 4 per hour]	$62,000
Selling Expenses	$14,000	$75,000 [25000 units x $ 3]	$89,000
Administrative	$7,000	$12,500 [25000 units x $ 0.5]	$19,500
Total Cost	$33,000	$462,500	$495,500