Contemporary Engineering Economics (6th Edition)
Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 8, Problem 1P
To determine

Identify the production cost and periodic cost.

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Production cost are those cost that incurred during the manufacturing or purchasing of the goods. Thus, the costs storage and material handling cost for raw material, Lubricant for the machinery, depreciation cost for the equipment, inspection cost, direct labor cost, rqa material cost and advertising expense are included in the production cost.

Periodic cost are those cost that are not involved in the process of manufacturing or purchasing of the goods. Thus, gains or loss from the disposable of asset, depreciation of the company value and leasehold cost are tge periodic costs.

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Dime-a-Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $140. The materials cost for a synthetic diamond is $80. The fixed costs incurred each year for factory upkeep and administrative expenses are $800,000. The machinery costs $1.12 million and is depreciated straight-line over 10 years to a salvage value of zero. a. What is the accounting break-even level of sales in terms of number of diamonds sold? Accounting break-even diamonds b. What is the NPV break-even level of sales assuming a tax rate of 35%, a 10-year project life, and a discount rate of 12%? Note: Do not round intermediate calculations. Round your final answer to the nearest whole number. NPV break-even level of sales diamonds
Cost Flow Relationships The following information is available for the first month of operations of Bahadir Company, a manufacturer of mechanical pencils: Sales $792,000 Gross profit 462,000 Cost of goods manufactured 396,000 Indirect labor 171,600 Factory depreciation 26,400 Materials purchased 244,200 Total manufacturing costs for the period 455,400 Materials inventory, ending 33,000 Using the above information, determine the following missing amounts: a. Cost of goods sold $330,000 b. Finished goods inventory at the end of the month 66,000 c. Direct materials cost 211,200 d. Direct labor cost e. Work in process inventory at the end of the month
Wood for frames $ 14,500 Rent for retail store 3,900 Depreciation on office equipment 580 Assembly worker wages 2,450 CEO's salary 3,950 Glue and nails 650 Online sales commissions 1,900 Glass for frames 5,800 Depreciation on factory equipment 1,050 Factory utilities Stain for frames 600 650 Required: 1. Determine the cost of direct material. 2. Determine the cost of direct labor. 3. Determine the cost of manufacturing overhead. 4. Determine the total manufacturing cost. 5. Determine the total period cost. 6. Determine the total variable cost. 7. Determine the total fixed cost. 8. Determine the total prime cost. 9. Determine the total conversion cost.
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