Chapter 13, Problem 13.1ME

To determine

Manufacturing Cost:-

It is the cost that a company incurs to convert it raw material in to product. i.e. all that cost which is directly related to production of goods is termed as manufacturing cost. It includes direct material cost, direct labour cost and manufacturing overhead cost.

To calculate:

Total Manufacturing cost for May

Answer to Problem 13.1ME

Total Manufacturing cost for May is $68,200

Explanation of Solution

Total Manufacturing cost for May is calculated as follows:

Particulars	Amount
Raw material Used	18000
Direct Labour	26000
Factory Supplies	2500
Indirect Labour	8000
Plant Depreciation	6200
75% of Utilities( WN-1)	7500
Manufacturing Cost	$ 68,200

Working Notes-1

Utilities = $10000

Percentage of utilities cost that is related to factory cost = 75%

Utilities cost that need to include in Factory cost is

$\begin{array}{l}=\text{}75\%\times \text{}10000\\ =\text{}\$7500\end{array}$