Question

Lulu Lemon Pants is planning on producing 40,000 pants in the year. Each pant requires 0.60 metres of material at $4 per metre and 0.15 hour of direct labour at $18 per hour. Overhead is applied at the rate of $8 per direct labour hour.

Calculate the following budgeted costs:

a) Total metres of direct materials required to produce 40,000 pants: Answer metres

b) Total direct material cost to produce 40,000 pants: $ Answer

c) Total direct labour hours required to produce 40,000 pants: Answer hours

d) Total direct labour cost to produce 40,000 pants: $ Answer

e) Total manufacturing overhead cost applied in the production of 40,000 pants: $ Answer

Now calculate the following standard costs per pants (per unit):

f) Direct material cost per t-shirt: $ Answer per pants

g) Direct labour cost per t-shirt: $ Answer per pants

h) Manufacturing overhead cost per t-shirt: $ Answer per pants

i) Standard cost of one unit of product: $ Answer per pants

Answer 1

a) total meters of direct materials required to produce 40,000 pants (40,000 pants*0.60 meters)	24,000 meters
b) total direct material cost to produce 40,000 units (24,000 meters*$4 per metre)	$96,000
c)total direct labour hours required to produce 40,000 pants (40,000*0.15 per hour)	6,000 hours
d) total direct labour cost to produce 40,000 pants (6,000 hours*$18)	$108,000
e)total manufacturing overhead cost applied in production of 40,000 pants (6,000 hours*$8)	$48,000
f) direct material cost per pant ($96,000/40,000)	$2.40
g)direct labour cost per pant ($108,000/40,000)	$2.70
h)manufacturing overhead cost per pant ($48,000/40,000)	$1.20
i)standard cost of one unit of product ($2.40+2.70+1.20)	$6.30