Bellfont Company produces door stoppers. August production costs are below: Door

Question

Bellfont Company produces door stoppers. August production costs are below:

Door Stoppers produced                    74,000

Direct material (variable)                                            $20,000

Direct labor (variable)                                               40,000

Supplies (variable)                                                      20,000

Supervision (fixed)                                                      27,400

Depreciation (fixed)                                                    21,000

Other (fixed)                                                                4,800

In September, Bellfont expects to produce 100,000 door stoppers. Assuming no structural changes, what is Bellfont

Explanation / Answer

Total fixed cost = Supervision (fixed) +Depreciation (fixed)+Other (fixed) = 27400+21000+4800 = $53200..

Total variable cost for 74000 items = material + labor+supplies = 20000 + 40000+20000 = 80000.

Hence Variable cost for 100000pc = 80000*100000/74000 = $ 108108.108..

Hence Total cost of production = 53200+108108.108 = 161308.108..

Hence cost of 1 product = 161308.108/100000 = $ 1.613 = Answer

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