The purpose of this exercise is to familiarize you with costing in a manufacturing environment. The...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The purpose of this exercise is to familiarize you with costing in a manufacturing environment. The tool often utilized is the cost indented bill of material or BOM to develop a product cost. The bill of material is developed by design engineering and is structured to reflect how the product is to be assembled or manufactured. Material cost may be obtained from a purchase history or price quotations. Industrial engineering determines the labor standard or time required to make an assembly from time or methods studies. For example, .005 hours to assemble level 9 parts to make assembly 8 in the following bill of material. Wage rates may be obtained from collective bargaining agreements or from payroll records. A wage rate of $15 per hour multiplied by the assembly hours of .005 yields a labor cost of 7.5 cents of assembly labor. Overhead is often a function of labor or utilizes labor as a driver. For example, an overhead rate may be 130% of labor cost or labor hours worked. The overhead calculation for the previous example would be 7.5 cents multiplied by 130% or overhead per assembly of 9.75 cents. Other drivers may be used for overhead calculations such as machine hours. Overhead rates are determined during the annual budgeting process. Parts and assemblies are indented to show which parts are combined to make an assembly. Level Source Part Number Material Labor Overhead Total 7 899 898 MMPP MPP AO XX XX A1 B2 B3 XX XX XX A2 B4 B5 XX XX XX The (M) signifies a manufactured part. The (P) signifies a purchased part. The cost of level 9 parts are assembled to make level 8 cost. The level 8 costs are combined to make level 7. Levels 7 and 8 are manufactured parts. This is referred to as rolling the cost. You always start at the bottom and develop your cost to level 0. Once you reach level 0 costing for this product is complete. The purpose of this exercise is to familiarize you with costing in a manufacturing environment. The tool often utilized is the cost indented bill of material or BOM to develop a product cost. The bill of material is developed by design engineering and is structured to reflect how the product is to be assembled or manufactured. Material cost may be obtained from a purchase history or price quotations. Industrial engineering determines the labor standard or time required to make an assembly from time or methods studies. For example, .005 hours to assemble level 9 parts to make assembly 8 in the following bill of material. Wage rates may be obtained from collective bargaining agreements or from payroll records. A wage rate of $15 per hour multiplied by the assembly hours of .005 yields a labor cost of 7.5 cents of assembly labor. Overhead is often a function of labor or utilizes labor as a driver. For example, an overhead rate may be 130% of labor cost or labor hours worked. The overhead calculation for the previous example would be 7.5 cents multiplied by 130% or overhead per assembly of 9.75 cents. Other drivers may be used for overhead calculations such as machine hours. Overhead rates are determined during the annual budgeting process. Parts and assemblies are indented to show which parts are combined to make an assembly. Level Source Part Number Material Labor Overhead Total 7 899 898 MMPP MPP AO XX XX A1 B2 B3 XX XX XX A2 B4 B5 XX XX XX The (M) signifies a manufactured part. The (P) signifies a purchased part. The cost of level 9 parts are assembled to make level 8 cost. The level 8 costs are combined to make level 7. Levels 7 and 8 are manufactured parts. This is referred to as rolling the cost. You always start at the bottom and develop your cost to level 0. Once you reach level 0 costing for this product is complete.
Expert Answer:
Answer rating: 100% (QA)
Thank you for providing the information about the cost indented bill of material BOM and the process of developing a product cost Based on the provide... View the full answer
Related Book For
Data Modeling and Database Design
ISBN: 978-1285085258
2nd edition
Authors: Narayan S. Umanath, Richard W. Scammel
Posted Date:
Students also viewed these accounting questions
-
Suppose that there is no origination cost. Given the following information, Option A: Term: 30 years; Interest Rate: 5%; Discount Points: 0: Homeowner will move in 2 years Option B: Term: 30 years;...
-
The purpose of this exercise is to familiarize you with costing in a manufacturing environment. The tool often utilized is the cost indented bill of material or BOM to develop a product cost. The...
-
Write a literature review for your study. See below for an example of a literature review. Your literature review should provide both analysis and synthesis of previous studies as related to the...
-
Use the following to answer questions 1-3 below The records of Teresa's Toys Co. as of December 31, 20XX. Accounts payable Insurance expense Accounts receivable s10,000 500 19,000 S60,000 12,000...
-
Collect data and construct a confidence interval for a proportion for which you already know the answer. Use a sample of at least 100. You can select the situation for which you would like to do...
-
This case is a continuation of the Caesars Entertainment Corporation serial case that began in Chapter 1. Refer to the introductory story in Chapter 1 (see page 43) for additional background. (The...
-
True or false: If the two stocks have the same expected retum of 12 percent, then any portfolio of the two stocks will also have an expected retum of 12 percent.
-
Sue North is examining customer- service costs in the southern region of Capitol Products. Capitol Products has more than 200 separate electrical products that it sells with a 6- month guarantee of...
-
Find the area of the shaded region in the figure. (Round your answer to two decimal places.) 120 6
-
7.) For this problem, please use the Psychrometric Chart to complete the following table of conditions. Provide the psych chart used for full credit, label each point as the letter provided in the...
-
A data analytics company wants Short Stop to provide a new client billing process which integrates their current customers with new payment options as well as technical. The payment for Short Stop's...
-
2. Happy Toys makes wooden train sets, which it sells for $65 each. It has fixed costs of $80,000 per year and variable costs per unit of $27. a. What is Happy Toys contribution margin per train set?...
-
Throughout this module, you have been learning about developmental milestones, developmental screening, and how to determine when children may need further evaluation. Delays in social and...
-
RiskyCo and StableCo are seasonal businesses whose returns depend on the state of the economy. In the five equally-likely states of the world next year, RiskyCo's (StableCo's) returns are expected to...
-
Outline the concept of the critical path and its significance in project scheduling Explain what float (slack) is in project management. Discuss the difference between total float and free float and...
-
LABOUR LAW AND INDUSTRIAL RELATIONS Calvin, Ruth, John, Charles, D' Almeida, and Irene have been working for Dorcas and her sister Fildous for the past three (3) years. They usually work with...
-
Quality Chicken grows and processes chickens. Each chicken is disassembled into five main parts. Information pertaining to production in July 2012 is: Joint cost of production in July 2012 was $50. A...
-
Copying of the successful practices of others is called __________. (a) mimicry (b) scanning (c) grafting (d) strategy
-
The process of acquiring individuals, units, and/or firms to bring in useful knowledge to the organization is called __________. (a) grafting (b) strategy (c) scanning (d) mimicry
-
A firm which refuses to use debt in its capital structure even though it is capable of doing so will: a. Have too low of a WACC b. Incorrectly calculate prospective project NPVs as being too high c....
Study smarter with the SolutionInn App