Question

QUESTION 21 1 pc You purchased computer chips at $40 per unit for your ne business. Other component costs include: assembly hardware at $2 per unit and plastic castings at $10 per unit. You plan to sell each unit at a 50% mark-up over the total cost of producing each unit. The plan includes production of 200 units next month and selling of 150 units next month. Direct labor costs are $9 per hour and 5 units can be produced in one hour. What is the total cost of production for the next month? A. $4,015 B. $16, 245 C.$10,850 D. $10,760 E. None of the above 1 points QUESTION 22 Al Click Save and Sabina

Answer 1

Solution:

From the given information,

Total variable cost = Cost of computer chips + Cost of assembly hardware + Cost of plastic castings

Total variable cost = ($40 + $2 + $10) per unit

Total variable cost = $52 per unit

Number of units to be produced next month = 200 units

Total equipment cost = $52 per unit x 200 units

Total equipment cost = $10,400

Direct labor costs = $9 per hour

Number of units produced per hour = 5 units

To produce 200 units, number of labor hours required = 200 units to be produced / 5 units produced per hour

Number of hours required = 40 hours

Total direct labor costs = $9 per hour x 40 hours

Total direct labor costs = $360

Total cost of production for the next month is given as,

Total cost of production = Total equipment cost + Total direct labor costs

Total cost of production = $10,400 + $360

Total cost of production = $10,760

Answer: (D) $10,760