Can someone please help me on this question I would need hel

Can someone please help me on this question? I would need help with step by step and why you are doing what you are doing.

Minnesota Office Products (MOP) produces three different paper products at its Vaasa lumberplant: Supreme, Deluxe, and Regular. Each product has its own dedicated production line at theplant. It currently uses the following three-part classification for its manufacturing costs: directmaterials, direct manufacturing labor, and manufacturing overhead costs. Total manufacturingoverhead costs of the plant in July 2014 are $150 million ($15 million of which are fixed). Thistotal amount is allocated to each product line on the basis of the direct manufacturing labor costsof each line. Summary data (in millions) for July 2014 are as follows:SupremeDeluxeRegularDirect material costs$ 89$ 57$ 60Direct manufacturing labor costs$ 16$ 26$ 8Manufacturing overhead costs$ 48$ 78$ 24Units produced125150140Required:1.Compute the manufacturing cost per unit for each product produced in July 2014.2.Suppose that, in August 2014, production was 150 million units of Supreme, 190 millionunits of Deluxe, and 220 million units of Regular. Why might the July 2014 information onmanufacturing cost per unit be misleading when predicting total manufacturing costs inAugust 2014?

Solution

(1)

Supreme

Deluxe

Regular

Total

DM

89

57

60

206

Direct mfr labour cost

16

26

8

50

Mfr O/H cost

48

78

24

150

Total Mfr cost

153

161

92

406

FC allocated at a rate of $15M/$50M(direct mfr labour) equal to $0.30 per direct mfr labour dollar

(0.30 * 16,26,8)

4.8

7.8

2.40

15

Variable cost

148.20

153.20

89.60

391

Unit Produced (million)

125

150

140

Cost per unit (Total mfr cost/unit produced)

1.2240

1.0733

0.6571

Variable mfr cost pu

(Variable mfr cost/unit produced)

1.1856

1.0213

0.6400

(2)

Supreme

Deluxe

Regular

Total

Based on total mfr cost pu (1.2240 * 150, 1.0733 * 190, 0.6571 * 220)

183.60

203.93

144.56

532.09

Correct total mfr cost based on variable mfr cost plus fixed cost equals

(1.1856 * 150, 1.0213 * 190, 0.64 * 220)

177.84

194.05

140.80

512.69

Fixed cost

15

Total cost

527.69

The total manufacturing cost per unit in requirement 1 includes $15 million of indirectmanufacturing costs that are fixed irrespective of changes in the volume of output per month,while the remaining variable indirect manufacturing costs change with the production volume.Given the unit volume changes for August 2014, the use of total manufacturing cost per unitfrom the past month at a different unit volume level (both in aggregate and at the individualproduct level) will overestimate total costs of $532.09 million in August 2014 relative to thecorrect total manufacturing costs of $527.69 million calculated using variable manufacturing costper unit times units produced plus the fixed costs of $15 million

	Supreme	Deluxe	Regular	Total
DM	89	57	60	206
Direct mfr labour cost	16	26	8	50
Mfr O/H cost	48	78	24	150
Total Mfr cost	153	161	92	406
FC allocated at a rate of $15M/$50M(direct mfr labour) equal to $0.30 per direct mfr labour dollar (0.30 * 16,26,8)	4.8	7.8	2.40	15
Variable cost	148.20	153.20	89.60	391
Unit Produced (million)	125	150	140
Cost per unit (Total mfr cost/unit produced)	1.2240	1.0733	0.6571
Variable mfr cost pu (Variable mfr cost/unit produced)	1.1856	1.0213	0.6400