Reference no: EM132861244

Unit cost exercise

1: A factory produces ball-bearings for industry. It makes 100,000 a year, all the same type. Materials cost $5,000, labour $30,000, power $10,000 and packaging $1,000 per year.

Unit cost = $

2: A NMC craft workshop produces two wooden toys, a 'Noah's Ark' and a 'Rocking Horse'. What is the Unit Cost of each item?

a: The ark requires wood costing $2.50, paint costing $0.35, varnish costing$ 0.10 and 2 hours labour at $3.50 per hour.

Unit cost = $

b: The horse requires wood costing $24, paint costing $1.20, varnish costing $0.90, nails costing $0.30 and 5.5 hours labour at $4.50 per hour.

Unit cost = $

Working out selling price

Using the above example, with direct costs of $46,000 per 100,000 ball-bearings, indirect costs of $10,000 and a profit margin of $5,000 what would be the selling price for our Ball-bearings if NMC produced:

1: 100,000 ball-bearings per year

2: 50,000 ball-bearings per year

Working out selling price

Suppose you could work 2100 hours per year and paid yourself $9600. Fixed costs are $5000 and direct costs for this job are given below. You will need to work for twelve hours and you will need help for a further twelve hours though at a lower rate. What should the price to the customer be?

1: Your labour = $

2: Materials (paint) required, 4 tins x $8 = $

3: 12 hours sub-contract labour at $4.57 per hour = $ The price to the customer will now be: