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Week_4.1_-_Learning_Exercises_-_Student - Direct and...

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Direct and Indirect Costs What is the amount of indirect manufacturing costs? Cherry Computer assembles computers from components supplied by various manufacturers. Listed below are some of the costs that are incurred by the company this year. Insurance on the Assembly facility $3,000 Cost of hard drives installed in admin computers $50,000 Cost of advertising $5,000 Wages of employees who assemble $100,000 Salary of Shop Supervisor $60,000 Depreciation on testing and assembly Equipment $4,000 Wages of accountant $55,000 Solution:
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Traditional Absorption Costing - Single Cost Driver Simple and easy to use; however, product costs can be seriously distorted. Overhead is assigned using a single overhead cost pool. 1000 units of each product are produced. Estimated overhead costs are: $3,000 Estimated direct labor cost is: $3,000 Overhead allocation per DLH $1 ProPats Hats Shirts Banners Direct Materials $5,000 $5,000 $5,000 6000 mat+lab Direct Labor $1,000 $1,000 $1,000 1000 est ovhd 7000 / 1000 u What is the unit cost of producing a banner?
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Week_4.1_-_Learning_Exercises_-_Student - Direct and...

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