From the information given below you are required to 1. Prepare a standard cost

Question

From the information given below you are required to 1. Prepare a standard cost sheet for one unit and enter on the standard cost sheet the cost to show sub-totals for: 0 Prime cost () Variable production cost () Total production cost (v) Total cost 2 Calculate the selling price per unit allowing for a profit of 15 per cent of the seling price The following data are given: Budgeted output for the year 9,800 units Standard details for one unit Direct material 40 square metres at $5.30 per square metre Direct wages: Bonding department 48 hours at $2 50 per hour Finishing department 30 hours at $1.90 per hour Budgeted costs and hours per annum Variable overhead. hours) Bonding 375,000 500,000 150,000 300,000 Finishing department Fixed overhead hours) 392,000 Production Selling and distribution Administration 196,000 98,000

Explanation / Answer

1)
i)Prime cost=direct mterial+direct material
=(40*5.3)+((48*2.5)+(30*1.9))
=389
ii)Variable production costs=direct mterial+direct material+var overhead
=389+(500000/9800)=440.02
iii)total production costs=variable production cost +fixed overhead
=440.02+(392400/9800)
=480.06
iv)Total costs=total prodcutin costs+selling and admin costs
=480.06+((196000+98000)/9800)
=510.06

2)selling price=cost/(1-profit%)
=510.06/(1-15%)
=600.07

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