Product Direct Labor Burden Main Rm hrs Main Rm burden Mech Rm hrs Mech room

Product direct labor burden main rm hrs main rm

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Product | Direct Labor | Burden | Main Rm hrs | Main Rm burden | Mech Rm hrs | Mech room burden | Combined test rm burdens | Total costs | Again, these higher prices associated with parts being tested on the new machine would be accepted by customers because of the use of a new, superior machine. The price would be in line with what was expected. Other parts being tested on the older machines would not see a drastic price increase, just an increase due to the one year engineering expense. Also, the assumption for using this method is that the hours used by this machine for each part is readily available at little or no additional cost. ICA | $917.00 | $192.57 | 8.50 | $538.39 | 10 | $1,126.30 | $1,665 | $2,774 | ICB | $2,051.00 | $430.71 | 14.00 | $886.76 | 26 | $2,928.38 | $3,815 | $6,297 | Appendix Capacitor | $1,094.00 | $229.74 | 3.00 | $190.02 | 4.5 | $506.84 | $697 | $2,021 | Calculations for #2 Amplifier | $525.00 | $110.25 | 4.00 | $253.36 | 1 | $112.63 | $366 | $1,001 | Burden for Main Test Room: $2,103,116 / 33, 201 = $63.34 Diode | $519.00 | $108.99 | 7.00 | $443.38 | 5 | $563.15 | $1,007 | $1,635 | Q4) I would treat the new machine as a separate cost center because it will only be used to service one or two customers. Thus, all of the customers should not pay for the services received by one or two customers. Those customers should cover the costs of their testing needs accordingly. The calculated machine hr burden rate for the alternatives is as follows New Machine | Hrs | variable | Depreciation | Other | Total | Burden rate | First yr | 400 | $100,000 | $500,000 | $225,000 | $825,000 | $2,062.50 | Yrs 2-8 | 2400 | $100,000 | $125,000 | $150,000 | $375,000 | $156.25 | | | | | Average Burden rate all yrs | $ 195.15 | | | | | | | | Old Machine | Hrs | variable | Depreciation | Other | Total | Burden rate | | 33201 | $887,379 | $ 88,779 | $ 1,126,958 | $ 2,103,116 | $63.34 | On a per year basis, the Average burden rate of $195.15 for the new machine is much higher than the $63.34 burden rate for the testing room alone. However, when we expand the numbers to include the entire 8 years of the life of the new machine and spread out the costs among all 8 years, the combined burden rates for using the main testing room and the new machine drops to $71.69. Although this rate is still higher than the $63.34 for the test room itself, it may justify using the combined rates over the life of the new machine (8yrs). This would allow Seligram to charge a lower price for the testing services provided by the new machine and possibly even attract other potential customers to get more use out of the new machine while distributing the costs of it throughout all customers. If an analysis showed this to be a profitable endeavor, I would advocate combining the rates. Otherwise, I would leave the burden rates separate. Q5) The relationship between the Seligram case and the college costs articles is that they both involve distributing differing costs among differing programs evenly throughout all programs/products so that all customers are charged the same regardless of the services they utilize. In other words, some students in the college example, or some customers in the Seligram case are picking up a larger burden and subsidizing the costs for the other customers who end up paying less for their services on a per unit basis.
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Electronic Testing Operations- Existing cost system- Burden on labour cost basis Product DL $ Burden @ 145% of DL $ Total ICA 917.00 1329.65 2246.65 ICB 2051.00 2973.95 5024.95 Capacitor 1094.00 1586.30 2680.30 Amplifier 525.00 761.25 1286.25 Diode 519.00 752.55 1271.55 12509.70 Ignores the new dynamics
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