Cost Accounting Assignment
| The XYZ Company has purchased from ABC, Inc. | 90,000 | circuit boards annually. |
| The price has increased each year, reaching | $68 | per unit last year. |
| Because the purchase price has increased significantly, XYZ management has asked that an estimate be made of the cost to manufacture it in its own facilities. | ||
| The company has little experience with products requiring assembly. The engineering, manufacturing, and accounting departments have prepared a report for management which included the following estimates: | ||
| An assembly run of | 10,000 | units. |
| Additional production employees would be hired to manufacture the subassembly. However, no additional equipment, space, or supervision would be needed. | ||
| The report states that total costs (1) for | 10,000 | units |
| are estimated at | $977,000 | |
| The current purchase price is $68 a unit, so the report recommends a continued purchase of the product. | ||
| Components (outside purchases) | $140,000 | |
| Assembly labor (2) | 300,000 | |
| Manufacturing overhead (3) | 450,000 | |
| General and administrative overhead (4) | 87,000 | |
| Total costs | $977,000 | |
| (1) The cost is estimated in a relevant range of 100,000 units. | ||
| (2) Assembly labor consists of hourly production workers. | ||
| (3) Manufacturing overhead is applied to products on a direct labor dollar basis. | ||
| Variable overhead costs vary closely with direct labor dollars. | ||
| Fixed overhead | 50% | of direct labor dollars |
| Variable overhead | 100% | of direct labor dollars |
| Manufacturing overhead rate | 150% | of direct labor dollars |
| (4) General and administrative overhead is applied at | 10% | of the total manufacturing costs |
| The production cost for each circuit board produced with no learning is . | ||
| The production cost for each circuit board produced with the | 90% | cumulative average learning curve is . |
| Round your answers only to the nearest dollar with no $ sign or period. | ||
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