The following information was obtained regarding the production cost during the first six months of operation until the end of the year of an enterprise, which was established to produce one type of cabinet and started to operate on 1 July. Initial material and material expenses: D.I.M.M type Quantity per cabinet (m2) Unit purchase cost (S/m2) Hardboard 6 20 Formica 4 40 * Expenditure of excipients: Wood, plywood, screws, nails, keys, locks, etc. Prices are S 70 per locker. *Direct labor costs: Fee is paid per piece, and the fee per piece is $ 150 per cabinet. *Foreman fees: The monthly total amount of foreman wages is $ 100000. *Depreciations: The monthly amount of depreciation related to production vehicles and facilities is $ 120000. *Factory management expenses: The monthly total amount of various production expenses, which are excluded from the above items and collected under the heading of factory management expenses, is $ 140000 and is not affected by the number of products produced. a) Write down the expense functions that reflect the relationships between each of the business's production expenses and the monthly cabinet production. b) Write the monthly total cost of production function. c) Write down the annual total cost of production function.
The following information was obtained regarding the production cost during the first six months of operation until the end of the year of an enterprise, which was established to produce one type of cabinet and started to operate on 1 July. Initial material and material expenses: D.I.M.M type Quantity per cabinet (m2) Unit purchase cost (S/m2) Hardboard 6 20 Formica 4 40 * Expenditure of excipients: Wood, plywood, screws, nails, keys, locks, etc. Prices are S 70 per locker. *Direct labor costs: Fee is paid per piece, and the fee per piece is $ 150 per cabinet. *Foreman fees: The monthly total amount of foreman wages is $ 100000. *Depreciations: The monthly amount of depreciation related to production vehicles and facilities is $ 120000. *Factory management expenses: The monthly total amount of various production expenses, which are excluded from the above items and collected under the heading of factory management expenses, is $ 140000 and is not affected by the number of products produced. a) Write down the expense functions that reflect the relationships between each of the business's production expenses and the monthly cabinet production. b) Write the monthly total cost of production function. c) Write down the annual total cost of production function.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:The following information was obtained regarding the production cost during the first six
months of operation until the end of the year of an enterprise, which was established to
produce one type of cabinet and started to operate on 1 July.
Initial material and material expenses:
D.I.M.M type
Quantity per cabinet (m2)
Unit purchase cost (S/m2)
Hardboard
6
20
Formica
4
40
* Expenditure of excipients:
Wood, plywood, screws, nails, keys, locks, etc. Prices are $ 70 per locker.
*Direct labor costs:
Fee is paid per piece, and the fee per piece is $ 150 per cabinet.
*Foreman fees:
The monthly total amount of foreman wages is $ 100000.
*Depreciations:
The monthly amount of depreciation related to production vehicles and facilities is $ 120000.
*Factory management expenses:
The monthly total amount of various production expenses, which are excluded from the above
items and collected under the heading of factory management expenses, is $ 140000 and is
not affected by the number of products produced.
a) Write down the expense functions that reflect the relationships between each of the
business's production expenses and the monthly cabinet production.
b) Write the monthly total cost of production function.
c) Write down the annual total cost of production function.
d) Write down the annual unit cost of production function
e) If the total production of the enterprise for 6 months until the end of the year is 2000
products, what is the cost per cabinet?
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