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Bellfont Company produces door stoppers. August production costs are below: Door stoppers 77,000 Direct material (variable)...

Bellfont Company produces door stoppers. August production costs are below:

Door stoppers 77,000

Direct material (variable) $20,000

Direct labor (variable) 40,000

Supplies (variable) 20,000

Supervision (fixed) 29,900

Depreciation (fixed) 22,400

Other (fixed) 5,800

In September, Bellfont expects to produce 100,000 door stoppers. Assuming no structural changes, what is Bellfont's production cost per door stopper for Septemeber? Round to two decimal places

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Answer #1

The production cost is computed as shown below:

= [ [ Direct material + Direct labour + Supplies (variable) ] / 77,000 ] x 100,000

= [ [ $ 20,000 + $ 40,000 + $ 20,000 ] / 77,000 ] x 100,000

= $ 103,896.1039

So, the production cost per door stopper is computed as follows:

= $ 103,896.1039 + Supervision (Fixed) + Depreciation (Fixed) + Others (Fixed)

= ($ 103,896.1039 + $ 29,900 + $ 22,400 + $ 5,800) / 100,000

= $ 161,996.1039 / 100,000

= $ 1.62 Approximately

Feel free to ask in case of any query relating to this question

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