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Finance & Accounting
Pages 4 (1004 words)
Name Instructor Course Date Tijuana Bronze Machining 1. Use the information in Exhibit 2 to calculate the EXACT product costs PER UNIT for valves, pumps and flow controllers that are reported in Exhibit 1, Show your calculation. This would include a detailed presentation of the predetermined overhead rate used in the calculations.
ence we are able to determine total production per unit as follows: Product (Valves) Explanation Cost Manufacturing overhead (4.39% X 4) 17.548 Materials $16 Direct labor based on run labor (16% X 0.25) 4 Total standard cost $38 Pumps Manufacturing overhead (4.39% X 8) 35.096 Materials $20 Direct labor based on run labor (16 X 0.50) 8 Total standard cost $63 Flow Controllers Direct labor based on run labor (16 X 0.40) 6.4 Materials $22 Manufacturing overhead (4.39% X 6.4) 28.0768 Total standard cost $56 2. No change Contribution margin = Sales - variable cost Since Mary Ford stipulated that, “In our situation, the only short-run variable cost is direct material" then the material cost can be considered to be the variable cost 3. This is using Mary Ford’s comments on a “more modern view” that uses material related overhead as well as additional overhead allocations. ...
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