Maintenance for factory equipment
Question: Determine the average cost of manufacturing one custom kitchen given the units expected to be sold every year, assuming the MOH costs are allocated based on the direct labor hours per unit. Calculate the sales price based on your cost calculation. Please show all calculations and round to the nearest dollar. I would recommend that you calculate the MOH per kitchen first. You should calculate an Overhead rate.
Question: Assuming Fancy Millwork is considering adding another line of product – bookshelves (keeping the Cabinet production constant at 800 units). Adding this line will require hiring a different type of worker which costs the company $15/hour. Fancy Millwork estimated each unit takes 30 hours of labor, and $1,500 direct materials. This line is estimated to incur additional fixed MOH $466,250 for the year, and variable costs/expenses per unit are the same as the Cabinet product line. This bookshelf product line shares the fixed period costs/expenses with the Cabinet line. Fancy Millwork estimated sales price of each bookshelf would be $3,000. How many units should the company sell to make adding the additional line economically feasible/attractive (round to the closest integer)?
Question: Please write two paragraphs discussing other options for the activity base and the importance of the MOH allocation for Fancy Millwork. Do multiple product lines impact the MOH allocation?
Fancy MillworkDirect Labor : 40 Hrs per job at $10 per Hr$400Direct Materials$2 , 000Direct Labor Hours$320, 000Manufacturing Overhead :`Overheard rate per hourAmountSalaries for factory supervisors and janitors$6. 25$ 200 , 000Factory rent$2.50 / 580 , 000 . 00Depreciation – factory equipment$2.19 / S70 , 000. 00Factory Property taxes50. 31 / 510 , 000 . 00Maintenance for factory equipment$2.50 / 580, 000. 00Total Manufacturing Overhead Per Unit$13.754.40, 00040 Hrs$550Total Product Cost Per Unit$2 , 95080%$2 , 360Sales Price$5 , 310