Fleet Street Incorporated a manufacturer of high-fashion clothing for women, is located in South London in the UK. Its product line consists of trousers (32%), skirts (25%). dresses (13%), and other (30%). Fleet Street has been using a volume-based rate to assign overhead to each product; the rate it uses is £2.52 per unit produced. The results for the trousers line, using the volume-based approach, are as follows: Number of units produced Price (all figures in £) Total revenue Direct materials Direct labor Overhead (volume-based) Total product cost Nonmanufacturing expenses Total cost Profit margin for trousers Pattern cutting Grading Recently, Fleet Street conducted a further analysis of the trousers line of product, using ABC. In the study, eight activities were identified, and direct labor was assigned to the activities. The total conversion cost (labor and overhead) for the eight activities, after allocation to the trousers line, is as follows: Lay planning Sewing Finishing Inspection Boxing up Storage £ 34,860 30,000 29,300 12,000 28.48 33,400 22,500 10,000 5,400 10,800 341,760 56,200 187,600 30, 240 274,040 51,100 325, 140 16,620

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Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.