Question

The period manufacturing costs of a company is comprised of $2,000,000 in direct materials, $1,000,000 in direct labor, and $500,000 in overhead, resulting in 7,000 units of product. Manufacturing operations consists of two processes, machining and assembly. Machining takes up 40% of direct materials, 60% of direct labor, and 50% of overhead. Provide a hybrid manufacturing cost statement, containing combined activity-based costing and process costing.

Answer 1

Total Direct material = 2000000

Total Overheads = 500000

Total Direct labor = 1000000

Product units = 7000 units

Direct materials on machinery=2000000*40%=800000

Direct labor on machinery =1000000*0%=600000

Overhead on machinery =500000*50%=250,000

Direct materials on assembly = 2000000-800000=1200000

Direct labor on assembly =1000000-600000=400000

Overhead on assembly = 500000-250000=250000

Direct material cost per unit = Total direct material/product units =2000000/7000 =285.71 per unit

Direct labor per unit = Total direct labor/ product units

=1000000/7000 =142.86 per unit

Overhead per unit = Total overhead/ product units

=500000/7000 =71.42 per unit

Step-by-step explanation:

According to the given data, the hybrid manufacturing cost statement, containing combined activity-based costing and process costing would be as follows:

Total Direct material = 2000000

Total Overheads = 500000

Total Direct labor = 1000000

Product units = 7000 units

Direct materials on machinery=2000000*40%=800000

Direct labor on machinery =1000000*0%=600000

Overhead on machinery =500000*50%=250,000

Direct materials on assembly = 2000000-800000=1200000

Direct labor on assembly =1000000-600000=400000

Overhead on assembly = 500000-250000=250000

Direct material cost per unit = Total direct material/product units =2000000/7000 =285.71 per unit

Direct labor per unit = Total direct labor/ product units

=1000000/7000 =142.86 per unit

Overhead per unit = Total overhead/ product units

=500000/7000 =71.42 per unit