Question

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

Door Stoppers produced                    76,000

Direct material (variable) $20,000

Direct labor (variable)                                               40,000

Supplies (variable)                                                      20,000

Supervision (fixed)                                                      28,500

Depreciation (fixed)                                                    23,200

Other (fixed)    5,900

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

Round to two decimal places.

Answer 1

Calculation of Variable cost per Door Stoppers

Variable cost per Door Stoppers = Total Variable costs / 76,000 Door Stoppers

= [$20,000 + $40,000 + $20,000] / 76,000 Door Stoppers

= $80,000 / 76,000 Door Stoppers

= $1.05 per Door Stopper

Total Fixed Costs

Total Fixed Costs = Supervision + Depreciation + Other Fixed Costs

= $28,500 + $23,200 + $5,900

= $57,600

Therefore, the production cost per door stopper for September for producing 100,000 door stoppers = [Total Variable costs + Total fixed cost] / 100,000 Door Stoppers

= [(100,000 Door Stoppers x $1.05 per Door Stoppers) + $57,600] / 100,000 Door Stoppers

= [$105,000 + $57,600] / 100,000 Door Stoppers

= $162,600 / 100,000 Door Stoppers

= $1.63 per Door Stopper

“Hence, the Bellfont's production cost per door stopper for September would be $1.63 per Door Stopper”