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Question - Kilda Enterprises produces parts for the electronics industry. The production manager and cost analyst reviewed the accounts for the previous month and have provided an estimated breakdown of the fixed and variable portions of manufacturing overhead.
Fixed
Variable
Total
Indirect materials
$4,000
$9,000
$13,000
Indirect labor
2,500
16,500
19,000
Supervision
10,000
3,500
13,500
Depreciation
37,000
5,000
42,000
Maintenance
17,000
22,000
39,000
$70,500
$56,000
$126,500
Direct materials for the month amounted to $102,500. Direct labor for the month was $197,500. During the month, 12,500 units were produced.
Required -
a. No changes are expected in these cost relations next month. The firm has budgeted production of 16,250 units. Provide an estimate for total production cost for next month.
b. Determine the cost per unit of production for the previous month and the next month.
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