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MetalMex, Ltd. , is engaged in the production and sales of two products for the automotive industry: product A and product B. The manufacturing process,

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MetalMex, Ltd., is engaged in the production and sales of two products for the automotive industry: product A and product B. The manufacturing process, which is identical for each of the products can be briefly described as follows:

  • In an initial phase the direct materials are converted in the cost centre of Manufacturing (unit of work: Mh);

  • After this, there is a process of manual improvement in the Finishing cost centre (unit of work: Lh) in order products become ready to sell to customers.

There are additionally two service cost centres: Cleaning (unit of work: Lh) and General Services, which allocates costs to the remaining cost centres in the following proportion: 30% for the Manufacturing, 60% for the Finishing and 10% for the Cleaning.

For the month of January, the company has available the following information:

  1. Consumption of Direct Materials
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\fDistribution costs - Variable 5% of sales Distribution costs - Fixed 4.300 Administrative costs - Fixed 2.500 Financial costs - Fixed 3.150

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