Materials - handling costs
Lubricants and coolants
Misc indirect labor
Misc direct labor
Direct materials inv Jan 1, 2010
Direct materials inv Dec 31, 2010
Finished goods inv, Jan 1, 2010
Finished goods inv, Dec 31, 2010
WIP Jan 1, 2010
WIP Dec 31, 2010
Plant lease costs
Depreciation - PPE
Direct materials purchased
Customer service costs
Using the information in the table, create an income statement with a schedule for costs of goods manufactured. Make sure that for the costs you classify if they are direct or indirect and indicate if they are variable or fixed.
Let's assume that both direct material costs and plant leasing costs are for the production of 1,800,000 units. What would be the direct material cost of each of these units produced? Plant leasing cost per unit? Plant leasing should be a fixed cost here.
Now let's assume we build 2,000,000 units next year. Repeat the calculations in item #2 above for direct materials and plant leasing costs.
Explain why the unit costs for direct materials didn't change in numbers 2 and 3, but the unit costs for the plant lease did.