Determine the cost per board feet

Assignment Help Managerial Accounting

Reference no: EM132802787

Capital Investment (depreciated over 36 months):

You have been asked by the Manager to go over a business proposal from a prospective Business Partner. This partner will supply all the Raw Materials, and we supply the equipment and the labour. We are forecasting to employ at least 8 workers to run the Sawmill.

Relevant Financial Data:

Cost of Equipment $36,000

Shed $18,000

Operating Expenses (Annual Cost):

Maintenance cost of Equipment $12,000

Supplies and Materials $7,800

Employee Protective Clothing $4,200

Annual Salary Costs:

Instructor Salary $54,000

Benefits $6,000

Employee allowance $1,200

Production on the machine ranges from a minimum of 1,000 board feet to a maximum of 3,000 board feet per day.

Problem 1: Determine the cost, per board feet, that we have to charge in order to cover the overhead cost of operating the Sawmill, at the minimum production rate, and the maximum production rate. Include in your analysis the monthly break down of salary, capital and operating expenses. Assume 20 working days in each month.

Reference no: EM132802787

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