A manufacturing business Grimoak Corp organizes its producti

\"A manufacturing business, Grimoak, Corp., organizes its production into four cost centers.\"

A manufacturing business, Grimoak, Corp., organizes its production into four cost centers. Last month the company produced 60,000 items of product. Further details of the costs are included in the following table Cost center Production overhead Floor area (excluding the fa rental Machining Assembly & finishing Packaging Maintenance & repairs 291,975 1,500 sq. m 130,305 1,700 sq. m 116,140 1,600 sq. m 68,965 2,100 sq. m Maintenance & repairs is a service cost center that has worked 6,000 LH to Machining, 3,400 LH to Assembly & finishing and 5,800 LH to Packaging Required 1. Using the floor area as base of apportionment, compute the cost of the factory rental (23,115 ) of each cost center. Calculate the overhead absorption rate for each department on the following basis 2. a. Machining b. Assembly & Finishing c. Packaging d. Maintenance & Repairs - machine time direct labor hours units of production direct labor hours 120,000 MH 30,000 LH 60,000 items 15,200 LH - 3. The prime cost and timing details for one unit of production are: Materials Direct labor Prime cost (or direct cost 16.20 19.00 35.20 Each unit uses 2 hours of machine time in the machining department. Each unit uses 0.5 direct labor hours in the assembly and finishing department. Calculate the total production cost for one unit of the company\'s product.

Solution

Q 18) Req 1) Cost center Floor area Factory rental Machining 1500 23115*1500/6900=5025 Assembly & finishing 1700 5695 Packaging 1600 5360 Maintenance & repairs 2100 7035 Total 6900 23115 Req 2) Cost center Production overhead (except Fact rental) Factory rental Total Overhead Absorption basis Absorption rate Machining 291975 5025 297000 120000 2.48 per MH Assembly & finishing 130305 5695 136000 30000 4.53 per DLH Packaging 116140 5360 121500 60000 2.03 per item Maintenance & repairs 68965 7035 76000 15200 5.00 per DLH Total 607385 23115 Req 3) Prime cost = 35.20 Total production cost per unit = Prime cost + overhead indirect cost = 35.20+11.76= $46.96 Overhead cost =machining overhead + assembly & finishing + Packaging + Maintenance & repairs overhead Overhead cost = 2 MH * $2.48 + 0.50DLH * $4.53 + 2.03 + 0.5 DLH * $5 = $11.76