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Unformatted text preview: r of batches Number of designs Hours of production Direct material and direct manufacturing labor are costs that can be easily traced to output, which in this case is the number of bags produced. Setup and shipping are both a funct ion of the number of batches produced. Design is related to the number of designs created for each product. Plant utilit ies and administration result fro m general act ivit y level in the plant. Thus, hours of production seems to be an appropriate cost driver. 3. Direct materials—purses $362,000 ÷ 3,150 purses = $114.92 per purse Direct materials—backpacks $427,000 ÷ 6,000 backpacks = $71.17 per backpack Direct manufacturing labor—purses $98,000 ÷ 3,150 purses = $31.11 per purse Direct manufacturing labor—backpacks $115,597 ÷ 6,000 backpacks = $19.27 per backpack Setup $64,960 ÷ 203 = $320 per batch Shipping $72,065 ÷ 203 = $355 per batch Design $167,000 ÷ 5 = $33,400 per design Plant utilit ies and administration $225,000 ÷ 4,160 hours = $54.0865 p...
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- Spring '10
- Cost Accounting