Chenango Industries uses 12 units of part JR63 each month in the production of radar equipment. The cost of manufacturing one unit of JR63 is the following:
Direct material | $ | 4,500 | |
Material handling (20% of direct-material cost) | 900 | ||
Direct labor | 34,000 | ||
Manufacturing overhead (150% of direct labor) | 51,000 | ||
Total manufacturing cost | $ | 90,400 | |
Material handling represents the direct variable costs of the Receiving Department that are applied to direct materials and purchased components on the basis of their cost. This is a separate charge in addition to manufacturing overhead. Chenango Industries’ annual manufacturing overhead budget is one-third variable and two-thirds fixed. Scott Supply, one of Chenango Industries’ reliable vendors, has offered to supply part number JR63 at a unit price of $58,000.
Required:
Chenango Industries uses 12 units of part JR63 each month in the production of radar equipment. The cost of manufacturing one unit of JR63 is the following: Direct material $ 4,500 Material...
Chenango Industries uses 11 units of part JR63 each month in the production of radar equipment. The cost of manufacturing one unit of JR63 is the following: Direct material $ 4,000 Material handling (20% of direct-material cost) 800 Direct labor 33,000 Manufacturing overhead (150% of direct labor) 49,500 Total manufacturing cost $ 87,300 Material handling represents the direct variable costs of the Receiving Department that are applied to direct materials and purchased components on the basis of their cost. This...
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