Question

I just want to make the productions runs per month which is in bold to be related to ether total run labor cost per month or to standard cost per unit

Manufactoring Cost			Valves	Pumps	Flow controllers
Material cost per unit			16	20	22
Units per month			7500	12500	4000
Material cost per month			120000	250000	88000
Labor cost
Production runs per month			1	5	10
Set- up labor hours/production run			8	8	12
Labor hrs per unit			0.25	0.5	0.4
Set- up labor hours/month			8	40	120
Run labor hours per month			1875	6250	1600
Labor cost per hour		16
Set up cost per month			128	640	1920
Run labor cost per month			30000	100000	25600
Machine usage hours per unit			0.5	0.5	0.2
Machine usage hours per month			3750	6250	800
Machine usage cost per month			93750	156250	20000
Machine depreciation per hour of use				25
						Total
Receiving			600	3800	15600	20,000
Materials Handling			6000	38000	156000	200,000
Engineering			20000	30000	50000	100,000
Packing and shipping			1800	13800	43800	60,000
Maintainance			10500	17400	2100	30,000
Total overhead costs			38900	103000	267500	410000
Stander cost per unit			37.68667	48.74	100.275

Answer 1

Production runs per month is given to find out the set up cost per month. In the data given, set up labor hours per month is not directly given. Instead they have given set up labor hours per production run. Therefore the production runs per month is multiplied by set up labor hours per production run which is then multiplied by the labor rate.

On the other hand, run labor cost per month requires the run labor hours per month. Labor hours per unit and the total units produced per month is given. We need only these figures to reach run labor cost per month.

Production runs per month	[A]	1	5	10
Set up labor hours / production run	[B]	8	8	12
Set up labor hours / month	[A x B=C]	8	40	120
Labor hours per unit	[D]	0.25	0.5	0.4
Units per month	[E]	7,500	12,500	4,000
Run labor hours per month	[D x E=F]	1,875	6,250	1,600
Labor cost per hour	[G]	16	16	16
Set up cost per month	[C x G]	128	640	1,920
Run labor cost per month	[F x G]	30,000	100,000	25,600