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Cost Formulas Shorewood Manufacturing produces a single product requiring the following directmaterial and direct labor: Cost...

Cost Formulas Shorewood Manufacturing produces a single product requiring the following directmaterial and direct labor: Cost per Unit of Input Required Amount per Unit of Product Material A $8 / pound 10 ounces Material B $5 / pound 8 ounces Material C $20 / gallon 0.3 gallon Cutting labor $9 / hour 30 minutes Shaping labor $11 / hour 15 minutes Finishing labor $12 / hour $45 minutes Manufacturing overhead consists of indirect material, $0.60 per unit of product; indirect labor, $1,000 per month plus $0.70 per unit of product; factory maintenance, $14,000 per year plus $0.55 per unit of product; factory depreciation, $15,000 per year; and annual factory property taxes, $8,000. Selling and administrative expenses include the salaries of a sales manager, $30,000 per year; an office manager, $18,000 per year; and two salespersons, each of whom is paid a base salary of $11,000 per year and a commission of $3 per unit sold. Advertising and promotion of the product are done through a year-round media package program costing $1,000 per week. a. Analyze all cost and expense factors to determine a general formula (based on units of production) for total cost. Round variable cost per unit answers to two decimal places, if applicable

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Answer #1
Particulars Variable Cost Amount Fixed Cost Amount
Material A 5
Material B 2.5
Material C 6
Direct Material 13.5
Cutting labor 4.5
Shaping labor 2.75
Finishing labor 9
Direct labor 16.25
Prime Cost 29.75
Manufacturing Overheads
Indirect Material 0.60
Indirect labbor 0.70 1000
factory maintenance 0.55 14000
Factory Depreciation 15000
Factory property taxes 8000
Works Cost 31.6 38000
Selling and administrative expenses
Salary of sales manager 30000
salary of office manager 18000
salesman salary-2*(11000) 22000
Salesman Commission 2*3 6
Advertising expenses(1000/week) 52000
Total Cost of Production 37.6 1,60,000

Total Cost of Production Formula= $31.60 units/product+$6 units/product sold+160000.

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