1. (2.5 points) Total manufacturing indirect maintenance costs are $100, and total indirect set-up costs are...
1. (2.5 points) Total manufacturing indirect maintenance costs are $100, and total indirect set-up costs are $200. You produced and sold 10 units of product A and 6 units of product B. Product A uses 2 direct labor dollars per unit and 5 machine hours per unit, and product B uses 5 direct labor dollars per unit and 3 machine hours per unit. You allocate manufacturing maintenance costs based on direct labor dollars, and set-up costs based on the number of units.
What are the total indirect costs allocated to product A?
Homework Answers
Manufacturing maintenance costs = Estimated total manufacturing maintenance costs / Estimated total direct labor dollars
Manufacturing maintenance costs = $100 / $50 [20(10*$2)+30(6*$5)] = $2 per direct labor dollar
Set up costs = Estimated set up costs / Estimated number of units
Set up costs = $200 / 16 = $12.5 per unit
| Product A | |
| Manufacturing maintenance costs (10*$2)*$2 | $40 |
| Set up costs (10*$12.5) | 125 |
| Total indirect costs | $165 |
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