summariz the mntioned below and paraphrase it in other simple words and calculate the cost for every year

InsourcingCosts

Theteamhasdecidedthatacomprehensivetotalcostanalysisshouldincludealldirectandindirectcostsincurredtosupportpistonproduction.FlexContracksitsmaterialsandlaborbycompletingproductionworksheetsforeachjob.Theteamcollecteddataforthepreviousyear,whichrevealedthatthethreeworkcellsproduced288,369pistons.

DirectMaterials

FlexConmachinesthepistonsfromasemifinishedsteelalloypurchaseddirectlyfromasteelfoundry.ThefoundryshipsthealloytoFlexConin50lb.blocks,whichcost$195perblock.Eachpistonrequires,onaverage,1.1lb.ofsemifinishedrawmaterialforeachfinishedpiston.Thisfigureincludesscrapandwaste.

Theteamexpectsthesemifinishedrawmaterialpricetoremainconstantoverthenexttwoyears.AlthoughFlexConexpectsgreaterpistonvolumesinYears1and2comparedwithcurrentdemand,theteamdoesnotbelieveadditionalmaterialeconomiesareavailable.

FlexCon spent $225,000 last year on other miscellaneous direct materials required to produce thepistons. The team expects to use this figure as a basis for calculating expected Year 1 and 2 costsformiscellaneousdirectmaterialrequirements.

DirectWorkCellLabor

Thedirectlaborinthethreeworkcellsworkedatotalof27,000hourslastyear.Totalpayrollfordirectlaborwas$472,500,whichincludesovertimepay.Theaveragedirectlaborrateis$17.50perhour($472,500/27,000totalhours=$17.50perhour).Asaruleofthumb,theteamexpectstoadd40%todirectlaborcoststoaccountforbenefits(health,dental,pension,etc.).Theteamalsoexpectsdirectlaborratestoincrease3%ayearforthenexttwoyears.Theteamdoesnotexpectper-hourproductionratestochangesignificantly.Theprocessiswellestablished,andFlexConhasalreadycapturedanylearningcurvebenefits.

Workcellemployeesareresponsibleformachinesetup,sotheteamdecidednottoincludemachinesetupasaseparatecostcategory.

IndirectWorkCellLabor

FlexConassignsasupervisor,materialhandler,andengineerfull-timetothethreeworkcells.Lastyear,thesupervisorearned$52,000,thematerialhandlerearned$37,000,andtheengineerearned$63,000insalary.Again,theteamexpectstoapplyanadditional40%tothesefigurestoreflectfringebenefits.Theteamexpectsthesesalariestoincrease3%eachyear.

FactoryOverheadandAdministrativeCosts

Thiscategoryofcostsis,withoutdoubt,themostdifficultcategoryofcosttoallocate.Forexample,shouldtheteamproratepartoftheplantmanager'ssalarytothepistonworkcells?Oneteammemberarguedthatthesecostsarepresentwithorwithoutpistonproductionand,therefore,shouldnotbepartoftheinsourcingcalculation.Anothermembermaintainedthatfactoryoverhead

supportsthefactory,andthethreeworkcellsareamajorpartofthefactory.Notincludingthesecostswoulddistorttheinsourcingcalculation.Shenotedthatthesupplierismostassuredlyconsideringthesecostswhenquotingthepistoncontract.Anothermembersuggestedperformingtwoanalysesofinsourcingcosts.Onewouldincludefactoryoverheadandadministrativecosts,andtheotherwouldexcludethesecosts.

Theteamdividedthefactoryintosix"zones"basedonthefunctionsperformedthroughouttheplant.Thepistonworkcellsaccountfor25%ofthefactory'sfloorspace,28%oftotaldirectlaborhours,and23%ofplantvolume.Fromthisanalysis,theteamhasdecidedtoallocate25%ofthefactory'soverheadandadministrativecoststothepistonworkcellsfortheanalysisthatincludesthesecosts.Exhibit3presentsrelevantcostdataforthepreviousyear.Theteamexpectsthesecoststoincrease3%eachyear.

PreventiveMaintenanceCosts

FlexConspent$40,250onpreventivemaintenanceactivitiesonthe18machinesinthethreecellslastyearandexpectsthistoincreaseby10%ineachofthenexttwoyears(duetotheincreasingageoftheequipment).

MachineRepairCosts

Anexaminationofmaintenanceworkordersrevealsthatthe18workcellmachines,whichareeachfivetosevenyearsold,requiredtotalunplannedrepairexpensesof$37,000lastyear.Themaintenancesupervisorexpectsthisfiguretoincreaseby8%inYear1and12%inYear2oftheanalysisduetoincreasingageandvolumes.

OrderingCosts

AlthoughFlexConproducespistonsin-house,thecompanystillincursorderingcostsfordirectmaterials.TheteamestimatesthateachmonthlyordertothefoundryandothersupplierscostsFlexCon$1,500indirectandtransaction-relatedcosts.

SemifinishedRawMaterialInventoryCarryingCosts

FlexContypicallymaintainsonemonthofsemifinishedrawmaterialinventoryassafetyandbufferstock.Thecarryingchargeassignedtothisinventoryis18%annually.