Question

I got the read-ahead package from the project staff. And I have a few questions.

Q#1 (100 points)   This table shows some of the info for the week.

20 sample M923’s were produced. It looks like the parts are in some kind of multiple per unit.

The first section shows the quantity of each part and the total cost. But doesn’t anybody think that I’d be interested in knowing the price for the part?

And I see the direct labor hours and the cost for those labor hours. But what is the average cost per dlh?

Same with overhead? I see that overhead is being driven by direct labor hours. And I can see the total cost for OH. But what is the OH rate?

M923 Units produced = 20 Part number Quantity Total Cost 222 80 $180.00 274 120 $360.00 546 100 $325.00 $865.00 Direct Labor Hrs. 126 $2,268.00 Overhead 126 $1,701.00 --------- $4,834.00

Answer 1

The part numbers shown are subpart of each unit produced. Each unit of the product required (80 / 20 = ) 4 parts of no. 222, (120 / 20 = ) 6 parts of no. 274 and (100/20 = ) 5 parts of no. 546. This is the material cost. Cost per part can be obtained by dividing total cost by no. of subparts.

Cost for part 222 = 180 / 80 = $2.25

Cost for part 274 = 360 / 120 = $3

Cost for part 546 = 325 / 100 = $3.25

The total material cost for no. of units = 180 + 360 + 325 = $865 which is given in the question.

Direct labor hours are given as 126. Total Cost for labor hours = $2268. Hence, average cost per dlh = 2268 / 126 = $18

The overhead = Direct labor hours. hence, Overhead is considered 100% of Direct labor hours. Total Overhead cost = 1701. Average cost per overhead hour = 1701 / 126 = $13.5

OH rate = $13.5

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