Homework Answers
First we estimate the labor cost for 20th unit
Labor required to make 1st unit=K=40 minutes
learning percentage=b=0.80
Time needed to make xth unit=Kxn
Where n=ln(b)/ln(2)=ln(0.80)/ln(2)=-0.3219
So,
Time needed to make 20th unit=40*(20)-0.3219=15.2496 minutes
Labor Cost=(15.2496/60)*16=$4.07
Material Cost=2*9+1*7+1*18=$43
Overhead=140% of material cost=140%*43=$60.20
Cost of new product=Material Cost+Labor cost+overhead=43+4.07+60.20=$107.27
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Problem 4-16 Contrasting ABC and Conventional Product Costs [LO4-2, LO4-3, LO4.4) (The following information applies to the questions displayed below.) For many years, Thomson Company manufactured a single product called LEC 40. Then three years ago, the company automated a portion of its plant and at the same time introduced a second product called LEC 90 that has become increasingly popular. The LEC 90 is a more complex product, requiring 0.60 hours of direct labor time per unit to manufacture...
Required information [The following Information applies to the questions displayed below.) Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 5 pounds at $10.00 per pound Direct labor: 4 hours at $16 per hour Variable overhead: 4 hours at $7 per hour Total standard variable cost per unit $50.00 64.00 28.00 $142.00 The company also established the following cost formulas...
Required information The following Information applies to the questions displayed below.] Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and its standard cost card per unit is as follows: Direct material: 5 pounds at $10.00 per pound Direct labor: 4 hours at $16 per hour Variable overhead: 4 hours at $7 per hour Total standard variable cost per unit $ 50.00 64.00 28.00 $142.00 The company also established the following cost...
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