solution 4.24 - 395.00 390.00 400.00 Cost Driver Rate 24.10...

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Solution to Part a 1) Based on the number of set ups Week 1 Week 2 Week 3 Direct Labour Cost (a) 5,520.00 5,520.00 5,520.00 Other Costs (b) 4,000.00 4,000.00 4,000.00 Total Set up Cost 9,520.00 9,520.00 9,520.00 Number of Setups 160.00 160.00 160.00 Cost Driver Rate 59.50 59.50 59.50 (a) \$10 per hour x 10 workers x 40 hours x 1.38 (b) \$25 x 160 setups 2) Based on the number of set up hours Week 1 Week 2 Week 3 Direct Labour Cost (a) 5,520.00 5,520.00 5,520.00 Other Costs (b) 4,000.00 4,000.00 4,000.00 Total Set up Cost 9,520.00 9,520.00 9,520.00 Number of Setup hours*

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Unformatted text preview: 395.00 390.00 400.00 Cost Driver Rate 24.10 24.41 23.80 * calculation of set up hours Week 1 (2x85) + (3x75) = 395 Week 2 (2x90) + (3x70) = 390 Week 3 (2x80) + (3x80) = 400 Solution to Part b If only one cost driver can be used, then it is preferred that the driver rate based on number of s be used because setup time is different for the two products in three weeks. However, a combin two may be used because some of the costs are based on number of set ups and some of them on the setup hours. set up hours ination of the m depends...
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This note was uploaded on 05/13/2010 for the course MECH 17657 taught by Professor Ravikant during the Spring '10 term at Indian Institute of Technology, Delhi.

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solution 4.24 - 395.00 390.00 400.00 Cost Driver Rate 24.10...

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