Stampout Plastics produces different kinds of products, all in one manufacturing facility. They have identified four activities for their costing system: Materials management—allocated by number of purchase orders Chemical processing—allocated on metric tons Molding—allocated on direct labor hours Packaging—allocated by number of units produced The activity rates are as follows: Materials management $12.00 Per purchase order Chemical processing $7.50 Per metric ton Molding $24.00 Per direct labor hour Packaging $0.10 Per unit Engineering design shows that the order will require direct materials that cost $540; direct labor cost will be $90. The order will also require four purchase orders to be placed, use two metric tons of chemical base, and need eight direct labor hours. The size of the order is to produce 3,000 units of product. Calculate the total production of the order.
Stampout Plastics produces different kinds of products, all in one manufacturing facility. They
have identified four activities for their costing system:
Materials management—allocated by number of purchase orders
Chemical processing—allocated on metric tons
Molding—allocated on direct labor hours
Packaging—allocated by number of units produced
The activity rates are as follows:
Materials management $12.00 Per purchase order
Chemical processing $7.50 Per metric ton
Molding $24.00 Per direct labor hour
Packaging $0.10 Per unit
Engineering design shows that the order will require direct materials that cost $540; direct labor cost will be
$90. The order will also require four purchase orders to be placed, use two metric tons of chemical base, and
need eight direct labor hours. The size of the order is to produce 3,000 units of product. Calculate the total
production of the order.
Production cost includes all the direct expenses like direct materials, direct labor, and other overhead expenses. It does not include selling and administrative expenses.
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