Metal barrels, used as containers for roofing asphalt and various industrial materials, are manufactured by MVM Containers Company. Materials cost for each container is $7.25, and labor cost per container is $2.00. Various supplies used in production cost $1.50 per container. Other direct operating costs of the barrel department, where these containers are made, are fixed and estimated for the year as follows:

The supervisor of this department controls all of these costs with the exceptions of equipment depreciation and the supervisor’s own salary of $48,000, which is included in supervision costs. Plant-wide overhead is allocated to departments based on a factor that combines space occupied with the number of employees.
The barrel department expects to be allocated 30 percent of plant-wide overhead costs of $240,000.

Required:
1. What are prime costs per container? What are variable costs per container?
2. What are conversion costs per container if 50,000 containers are produced?
3. Identify the costs controlled by the department supervisor.
4. What are the total costs per container, if MVM produces 40,000 containers per year? If MVM produces 50,000 containers per year?

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Supervision. Equipment and operating costs. Repairs and maintenance of equipment Equipment depreciation Total $ 85,000 6,000 3,500 1,500 $ 96,000