Identify if the following costs for a clothing store would be direct department
ID: 2540231 • Letter: I
Question
Identify if the following costs for a clothing store would be direct department costs or indirect costs. Also indicate which costs would likely be fixed vs. variable. 1. Cost of the goods sold Dinet, Rrad 2. Rent for the store Dina, xe d 3. Salary of the store manager Indirect a 4. Salaries of the sales people who can sell in any department 5. Hourly wage for the sales people who sell in only a specific department Mydinl-RXLd rble Direc ect, Vaila ble Karroll Company estimates overhead costs of $18,000 per month and direct production costs of $144 per unit. They also estimate 1000 units will be produced in the coming year. The compamy desires to earn a gross profit of $69 per unit. To make this happen, what should be the sales price per unit? 3022 125 149 Cable Company makes two types of boots- regular leather boots and steel-toed boots. Making a regular leather boot requires 4 hours of labor while making a steel-toed boot requires 10 hours of labor. The company plants to make 2,000 regular leather boots this year and 500 steel-toed boots. Indirect manufacturing costs amounted to $52,000 and are allocated based on labor hours. How much indirect manufacturing cost should be allocated to make a single regula leather boot? How much should be allocated to make a single steel-toed boot?Explanation / Answer
Q1. Total cost of 1000 units" Direct Production cost (1000 units @ 144) 144000 Add: Factory Overheads 216000 Total cost of 1000 units 360000 Cost per unit 360 Add Gross margin per unit 69 Selling price per unit 429 Q2. Regular Steel Toed Total Expected Production 2000 500 2500 Labour hours required per unit 4 10 Total Labour hours 8000 5000 13000 Pre-determined OH rate: Estimated overheads /Total DLH = $ 52,000 /13,000 horus= $ 4 per DLH Regular Steel Toed Labour hours required per unit 4 10 OH rate per hour 4 4 OH allocated per unit 16 40