Question

Assume that during the past month, Fineway produced 10,000 cartons of highlighter Highlighters has a translucent barrel and cap with a visible ink supply for see through colou The special fluorescent ink is fade and water resistance. Each carton contains 100 boxes markers and each box contains five markers. The markers come in boxes of one of fiv fluorescent colours- orange, blue, yellow, green and pink and in a five colour set. The standard cost for one carton of 500 markers is as follows: Standard Manufacturing Cost Elements Quantity Price Cost Direct materials Tips (boxes of 500 Translucent barrels and caps (boxes of 500 Fluorescent Ink (5 litre container) $32.00 500 500 5litre X $0.03 X $0.09 X $6.40 $15.00 = $45.00 Total direct material Direct labour $92.00 $2.25 0.25 hours X S9.00

Answer 1

a) Actual cost incurred\

Particulars	Amount
Direct Material
Tips	148000
Translucent barrels and caps	453900
Fluorescent ink	328185
Total Direct material	930085
Direct Labor	20240
Overhead cost (34600+84000)	118600
Total production cost	1068925

b) Standard cost for actual output

Here we calculate the cost that should have incurred according to standards that have been set.

Particulars	Calculation	Total Cost
Direct Material
Tips	10000 boxes x 15 per box	150000
Translucent barrels and caps	10000 boxes x 45 per box	450000
Fluorescent ink	10000 container x 32	320000
Total Direct material		920000
Direct Labor	2500 hours x 9 per hour	22500
Overheads
Variable over head	2500 hours x 15.7*	39250
Fixed		83980
Total Overhead cost		123230
Total cost of production		1065730

* variable overhead per hour =total variable overhead / Total actual hours

=40820 /2600 =15.7