Question

Tangshang Industries production budget from the 2^nd quarter of 2018, projected the following amounts of units to be produced:

April    1,000 units

May     1,200 units

June     1,250 units

Each unit requires 2 parts of component A and 3 parts of component B. Component A cost is $1.25 per unit and component B cost is $.80 per unit.

Each unit requires the following labor:

2 hours in the processing department

1 hour in the assembly department

Processing department labor rate is $4/hour

Assembly department labor rate is $6/hour

Variable Factory overhead is $.60 per unit

Fixed Factory overhead is $1,000 monthly

Using the information from the production budget of Tangshang Industries

1.Calculate total variable overhead cost for May 2018

2.Calculate total variable overhead cost for the quarter April - June 2018

3.Calculate total overhead cost for the quarter April - June 2018

4.Calculate total product cost for the quarter April - June 2018

Answer 1

1-	total variable overhead cost in may	no of units produced*variable overhead rate	1200*.6	720
2-	total variable overhead from Apl to June
	Month	Units	variable cost per units	total variable overhead for the month
	April	1000	0.6	600
	May	1200	0.6	720
	June	1250	0.6	750
	total variable overhead from Apl to June			2070
3-	total overhead cost = total variable overhead+(fixed overhead per month*no of months)	(2070)+(1000*3)	5070
4-	total product cost April- june
		April		May		June
Direct material = unit of component A*price of component per unit* total units produced + unit of component B*price of component per unit* total units produced	(1000*2*1.25)+(1000*3*.8)	4900	(1200*2*1.25)+(1200*3*.8)	5880	(1250*2*1.25)+(1250*3*0.8)	6125
Direct labor =(labor hour in processing*labor cost per hours* total units produced) +( labor hour in assembly*labor cost per hour* total units produced)	(1000*2*4)+(1000*1*6)	14000	(1200*2*4)+(1200*1*6)	16800	(1250*2*4)+(1250*1*6)	17500
variable overheads	1000*.6	600	1200*.6	720	1250*.6	750
fixed overheads		1000		1000		1000
total product cost		20500		24400		25375