a) Actual cost incurred\
Particulars | Amount |
Direct Material | |
Tips | 148000 |
Translucent barrels and caps | 453900 |
Fluorescent ink | 328185 |
Total Direct material | 930085 |
Direct Labor | 20240 |
Overhead cost (34600+84000) | 118600 |
Total production cost | 1068925 |
b) Standard cost for actual output
Here we calculate the cost that should have incurred according to standards that have been set.
Particulars | Calculation | Total Cost |
Direct Material | ||
Tips | 10000 boxes x 15 per box | 150000 |
Translucent barrels and caps | 10000 boxes x 45 per box | 450000 |
Fluorescent ink | 10000 container x 32 | 320000 |
Total Direct material | 920000 | |
Direct Labor | 2500 hours x 9 per hour | 22500 |
Overheads | ||
Variable over head | 2500 hours x 15.7* | 39250 |
Fixed | 83980 | |
Total Overhead cost | 123230 | |
Total cost of production | 1065730 |
* variable overhead per hour =total variable overhead / Total actual hours
=40820 /2600 =15.7
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