Question

9. - Normal 1 No Spac.. Heading 1 Heading 2 aragraph Styles Advanced Technologies (AT) produces two compression machines that are popular with manufacturers of plastics: no. 165 and no. 172. Machine no. 165 has an average selling price of $60,000, whereas no 172 typically sells for approximately $55,000. The company is very concerned about quality and has provided the following information Act Recorded Conte Al Cast Production Setup Number of Production Rams 60.000 Order Process Number of Odens 100.000 Material Handler Pounds of Mad s 40.000 Equipment Depreciation and Maintenance Machine Hous 120.000 Quality Management Number of inspechos 100.000 Packing and Shipping Number of Us Shaped 90.000 Total Estimated Overhead 500.000 Estimated Cost Drent 200 400 16,000 20.000 800 30.000 The company estimated 10,000 hbor hours would be worked in all of Year 2. Assume the following activities in February of Rarors 3.000 $8,000 Eagles 1 000 $4 000 100 200 Number of Units Produced Direct Materials Costs Direct Labor Hours Number of Production Runs Number of Orders Pounds of Material Used Machine Hours Number of inspections Units Shipped Direct labor costs are $20 per hour Soo 500 3000 $6,000 2.000 $4.000 1.000 $2.000 the cost drivers recommended by the consultat Earles 54.000 Compute the production costs for each product for February we Rans Direct Materials S8.000 Duct Labor SE000 SLO Production Setup Order Process Equp Dep. and Maintenance Quality Control She . Compute the production costs for each product for Februarie direct berbess the warhead atabase 58.000 56,000 55.000 $4.000 54.000 52.000 Direct Material Direct Labor Ohead Total Costs

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Answer 1

Overhead rates Overhead Cost drives Produtien Betup rate 60.000 200 $30 per setup. Order processing Machine bandling Equipment depreciation Quality management Packing & shipping = $ 250 per ordex $ 2.5 per pound = $6 per mu = $ 125 per Inspution. - $ 1 per unit shipped. Computation of prodution cost under ABC Razors Slims Eagles. Direct material Lost 8000 5000 4000 Direet Labor Lost. 6000 400D 2000. Prodution Lost 60 1 20. 300 Ordering cost 400D | 4000 4000. Machine handling Lost 2000 1250 750 Equipement cost 4800 2400 2400 Quality management cost 2500 2500 2500 Parking $ Shipping wst. 3000 2000 1000. TOTAL PRODUCTION LOST 30360 21270 16950,

c. Prodution cost wsing dired Labor hour as base Direct material. 8000 Direct labor 6000 Overhead (500,000 10,000) 15000 =$50 pex DLH 5000 4000 10,DOD 4000 2000 5000 TOTAL PRODUTION COST 29000 19000 11000

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