Question

Alaskan Pattern Company makes dressmakers' patterns using a machine that stamps the pattern outline onto tissue paper. The stamping center produced 40,000 patterns in August, with a machine time per pattern of 20 seconds. Annual budgeted cell conversion costs were as follows:

Maintenance and supplies	$1,650,000
Depreciation	700,000
Supporting labor	825,000
Total	$3,175,000

Alaskan planned 2,500 total machine hours for the year.

Calculate Alaskan's budgeted cell conversion cost rate for the year.
$ per machine hour

Answer 1

answer

total conversion costs= $3,175,000

available machine hours=2500

conversion costs rate per machine hour= total conversion cost/ available machine hours

=$3175000/2500

=$1270 per machine hour