Martin Mfg produces 1000 lens per month The following per un

Martin Mfg produces 1000 lens per month. The following per unit data apply for sales.

Direct materials$400; Direct labor$25; Variable overhead $50 and Fixed overhead $60.

The plant has capacity for 1500 lens.

Solve:

(a)What is the total cost of producing 1000 lens?

(b) What is the total cost of producing 1200 lens and

(c) What is the per unit cost of producing 1200 lens? (Budgeted overhead is $90,000).

Solution

a) Total cost of producing 1000 lens: Direct materials = 1000*400 = $         4,00,000 Direct labor = 1000*25 = $             25,000 Variable overhead = 1000*50 = $             50,000 Fixed overhead $             90,000 Total cost of producing 1000 lens $         5,65,000 b) Total cost of producing 1200 lens: Direct materials = 1200*400 = $         4,80,000 Direct labor = 1200*25 = $             30,000 Variable overhead = 1200*50 = $             60,000 Fixed overhead $             90,000 Total cost of producing 1200 lens $         6,60,000 c) Per unit cost of producting 1200 lens = 660000/1200 = $                   550