A. A small televisions company produces just one television model and it produce

Question

A. A small televisions company produces just one television model and it produces 10,000 units of this

model each year. The company incurs the following costs for the 10,000 units it produces each year:

- Indirect materials = $150,000

- Factory utilities = $80,000

- Direct materials = $465,000

- Indirect labor = $13,000

- Machines depreciation = $70,000

- Direct Labor = $400,000

- Warranties = $70,000

- Sales salaries = $80,000

- Factory insurance and maintenance = $22,000

- Profit costs (interest & risk) = $ 150,000

Allocate these costs under the standard cost categories, and determine for each unit the prime cost,

the manufacturing cost, the total cost at factory and the factory selling price.

Explanation / Answer

Standard cost categories are Indirect materials Factory utilities Direct materials Indirect labor Machines depreciation Direct Labor etc.

now prime cost for 10000unit=Direct material +Direct labour cost=465000$+400000$=$865000

So prime cost for 1 unit=$86.5(ans)

Manufacturing cost for 10000unit=all cost used for manufacturing of product=Indirect materials + Factory utilities+ Direct materials + Indirect labor+ Machines depreciation+ Direct Labor =$150000+$80000+$465000+$13000+$70000+$400000=$1178000

mfg cost for one unit=$117.8(ans)

Total cost at factory=mfg cost+Warranties+Factory insurance and maintenance=$1178000+$70000+$22000=$1270000

Total cost at factory for 1 unit=$127(ans)

factory selling price=total cost at factory+profit cost+sales salaries=$1270000+$150000+$80000=$1400000

factory selling price for 1 unit=$140(ans)

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