Question
Conform Foam Products produces different kinds of industrial packing materials, all in one manufacturing facility. They have identified four activities for their costing system: Materials
Conform Foam Products produces different kinds of industrial packing materials, all in one manufacturing facility. They have identified four activities for their costing system:
Materials managementallocated by number of purchase orders
Chemical processingallocated on metric tons
Moldingallocated on direct labor hours
Packagingallocated by number of units produced
The activity rates are as follows:
Materials management | $ | 10.00 | Per purchase order |
Chemical processing | $ | 6.50 | Per metric ton |
Molding | $ | 23.50 | Per direct labor hour |
Packaging | $ | 0.25 | Per unit |
Engineering design shows that the order will require direct material worth $775, direct labor cost being $125, require 5 purchase orders to be placed, use 6 metric tons of chemical base, need 12 direct labor hours. The size of the order is to produce 5,000 units of product.
Required:
(1) Calculate the overhead cost of the order.
(2) Calculate total cost of production of the order.
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