1) What is your product? Hairbrush 2) Find the direct material cost. Cost for Entire Container Direct Material Size of Package Unit Size Cost per Unit Example 5 lbs/22.5 cups $2.50 1 cup $0.11 our 3) How many units will be manufactured per production run? 4) List amounts of all direct materials used in production per production run. Cost per Unit Quantity Used from part 2per Production Direct Material Cost per Production Run above) Run Example our $0.11 2 cups $0.22 Total direct material cost per production run 10) Find the estimated manufacturing overhead costs for a month: Estimated Manufacturing Overhead Costs Cost Utilities Indirect materials (section 5) Small tools/equipment monthly depreciation (compute using section 6 information) Total estimated monthly manufacturing overhead cost 11) Using labor hours as the activity base, find the overhead application rate. Total estimated monthly manufacturing overhead cost (section 10) Total estimated monthly labor hours (section 9) Overhead application rate 12) Find the applied overhead per production run Labor hours per production run (section 7) Overhead application rate (section 11) Applied overhead 13) Find the product cost Direct Materials Cost per production run (section 4) Direct Labor Cost per production run (section 7) Applied Overhead per production run (section 12) Total product cost per production run Units manufactured per production run(section 3) Unit Cost 14) Pricing Decisions Be sure to include how the product will be packaged (how many per package, etc.) How did you arrive at the selling price? Selling Price 1) What is your product? Hairbrush 2) Find the direct material cost. Cost for Entire Container Direct Material Size of Package Unit Size Cost per Unit Example 5 lbs/22.5 cups $2.50 1 cup $0.11 our 3) How many units will be manufactured per production run? 4) List amounts of all direct materials used in production per production run. Cost per Unit Quantity Used from part 2per Production Direct Material Cost per Production Run above) Run Example our $0.11 2 cups $0.22 Total direct material cost per production run 10) Find the estimated manufacturing overhead costs for a month: Estimated Manufacturing Overhead Costs Cost Utilities Indirect materials (section 5) Small tools/equipment monthly depreciation (compute using section 6 information) Total estimated monthly manufacturing overhead cost 11) Using labor hours as the activity base, find the overhead application rate. Total estimated monthly manufacturing overhead cost (section 10) Total estimated monthly labor hours (section 9) Overhead application rate 12) Find the applied overhead per production run Labor hours per production run (section 7) Overhead application rate (section 11) Applied overhead 13) Find the product cost Direct Materials Cost per production run (section 4) Direct Labor Cost per production run (section 7) Applied Overhead per production run (section 12) Total product cost per production run Units manufactured per production run(section 3) Unit Cost 14) Pricing Decisions Be sure to include how the product will be packaged (how many per package, etc.) How did you arrive at the selling price? Selling Price
