A company is manufacturing building bricks and fire bricks. Both production require two processes. Brick forming and Heat treatment. The requirements for the two bricks are:
Building Bricks | Fire Bricks | |
Forming per 100 bricks | 3 hours | 2 hours |
Heating treatment per 100 bricks | 2 hours | 5 hours |
Total cost of the two departments in one months were: | ||
Forming | $ 21 200 | |
Heat treatment | $ 48 800 | |
Units produced during the month was: | 130 000 | 70 000 |
Require:
Prepare statement of manufacturing costs for the two types of bricks.
1.1 | |||||||
The statement of manufacturing costs for the two types of bricks is prepared as below. | |||||||
Statement Showing Manufacturing Costs of Building Bricks | |||||||
Process | Time for 100 Units (Hours) [A] | Rate Per Hour ($) [B] | Cost Per 100 Units [A*B] | Cost for 130,000 Units | |||
Brick Forming | 3 | 4 | $12 | 15,600 (130,000/100*12) | |||
Heat Treatment | 2 | 8 | $16 | 20,800 (130,000/100*16) | |||
$28 | $36,400 | ||||||
Statement Showing Manufacturing Costs of Fire Bricks | |||||||
Process | Time for 100 Units (Hours) [A] | Rate Per Hour ($) [B] | Cost Per 100 Units [A*B] | Cost for 70,000 Units | |||
Brick Forming | 2 | 4 | $8 | 5,600 (70,000/100*8) | |||
Heat Treatment | 5 | 8 | $40 | 28,000 (70,000/100*40) | |||
$28 | $33,600 | ||||||
Notes: | |||||||
The rate per hour calculation is determined as follows: | |||||||
Brick Forming: | |||||||
Total Building Bricks Hours = (Building Bricks Produced during the Month*Number of Forming Hours Per 100 Bricks)/100 = (130,000*3)/100 = 3,900 hours | |||||||
Total Fire Brick Hours = (Fire Bricks Produced during the Month*Number of Forming Hours Per 100 Bricks)/100 = (70,000*2)/100 = 1,400 hours | |||||||
Total Hours Needed for Brick Forming = Total Building Brick Hours + Total Fire Brick Hours = 3,900 + 1,400 = 5,300 hours | |||||||
Cost Per Hour of Brick Forming Department = Total Brick Forming Costs/Total Hours Needed for Brick Forming = 21,200/5,300 = $4 per hour | |||||||
Heat Treatment: | |||||||
Total Building Bricks Hours = (Building Bricks Produced during the Month*Number of Heat Treatment Hours Per 100 Bricks)/100 = (130,000*2)/100 = 2,600 hours | |||||||
Total Fire Brick Hours = (Fire Bricks Produced during the Month*Number of Heat Treatment Hours Per 100 Bricks)/100 = (70,000*5)/100 = 3,500 hours | |||||||
Total Hours Needed for Heat Treatment = Total Building Brick Hours + Total Fire Brick Hours = 2,600 + 3,500 = 6,100 hours | |||||||
Cost Per Hour of Heat Treatment Department = Total Heat Treatment Costs/Total Hours Needed for Heat Treatment = 48,800/6,100 = $8 per hour |
A company is manufacturing building bricks and fire bricks. Both production require two processes...
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