Question

Mathematical                         Financial

Annual Production in Units                                            50 000 100 000

Direct Material Costs 150 000 300 000

Direct Manufacturing Labour Cost 50 000 100 000

Direct manufacturing labour hours 2, 500 5 000

Machine Hours 25 000 50 000

Number of Production runs                                             50 50

Inspection hours 1 000 500

Total Manufacturing Overhead Costs are as follows:

Total

                                                                      Machining costs 375 000

                                                                      Setup Costs 120 000

                                                                      Inspection costs 105 000

Instruction:

1. Choose a cost driver overhead cost pool and calculate the manufacturing overhead cost per unit for each product.

2. Compute the manufacturing cost per unit for each product.

Answer 1