Question

Per part a new product will require 100 hours of labor, 388 pounds of material ZZZ and 552 pounds of material YYY. The labor rate is $99 per /hour and material ZZZ and YYY each cost $1.94 per pound. Indirect cost for the new product is estimated to be $11,233 a day. What is the daily cost of goods sold for the new product if 59 parts are sold per day? Enter answer to 2 decimal places.

Answer 1

Asnwer

Direct cost is the cost that foirm incurs in order to hire raw materials, labors, etc.

Here, Direct cost of producing 1 part = 99*Number of labor + 1.94*Amount of YYY + 1.94*Number of ZZZ.

=> Direct cost of producing 1 part = 99*100 + 388*1.94 + 552*1.94 = 11723.6

Thus, Direct cost of producing 59 parts = 11723.6*59 = 691692.4

So, Daily cost incurred = Indirect cost + Direct cost of producing 59 parts = 11233 + 691692.4 = 702925.4

Hence, The daily cost of goods sold = $702925.4