Question

Lulu Lemon Pants is planning on producing 40,000 pants in the year. Each pant requires 0.60 metres of material at $4 per metre and 0.15 hour of direct labour at $18 per hour. Overhead is applied at the rate of $8 per direct labour hour.

Calculate the following budgeted costs:

a) Total metres of direct materials required to produce 40,000 pants: Answer metres

b) Total direct material cost to produce 40,000 pants: $ Answer

c) Total direct labour hours required to produce 40,000 pants: Answer hours

d) Total direct labour cost to produce 40,000 pants: $ Answer

e) Total manufacturing overhead cost applied in the production of 40,000 pants: $ Answer

Now calculate the following standard costs per pants (per unit):

f) Direct material cost per t-shirt: $ Answer per pants

g) Direct labour cost per t-shirt: $ Answer per pants

h) Manufacturing overhead cost per t-shirt: $ Answer per pants

i) Standard cost of one unit of product: $ Answer per pants

Answer 1

Standard DATA for		40000	Pants
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 0.60 metres x 40000 Pants)=24000 metres	$      4.00	$ 96,000.00
Direct labor	( 0.15 hours of direct labor x 40000 Pants)=6000 hours of direct labor	$    18.00	$    1,08,000.00
Variable Overhead	( 0.15 Hours x 40000 Pants)=6000 Hours	$      8.00	$       48,000.00

a) Total metres of direct materials required to produce 40,000 pants: 24000 metres

b) Total direct material cost to produce 40,000 pants: $96,000

c) Total direct labour hours required to produce 40,000 pants: 6000 hours

d) Total direct labour cost to produce 40,000 pants: $ 108,000

e) Total manufacturing overhead cost applied in the production of 40,000 pants:$ 48000

	Total standard cost	Units	Cost per Unit
Material	$ 96,000.00	40000	$ 2.40
Direct labor	$ 1,08,000.00	40000	$ 2.70
Overheads	$      48,000.00	40000	$ 1.20
Total standard cost pet pant			$ 6.30

f) Direct material cost per t-shirt: $ 2.4 per pants

g) Direct labor cost per t-shirt: $ 2.7 per pants

h) Manufacturing overhead cost per t-shirt: $ 1.2 per pants

i) Standard cost of one unit of product: $ 6.3 per pants