1 answer

(Q.4) Gower, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis...

Question:

(Q.4) Gower, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classif

(Q.4) Gower, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2012. Account Direct materials Direct manufacturing labor Power Supervision labor Materials-handling labor Maintenance labor Depreciation Rent, property taxes, and administration 0% variable Amount $300,000 225,000 37,500 56,250 60,000 75,000 95,000 100,000 Classification All variable All variable All variable 20% variable 50% variable 40% variable 0% variable Gower, Inc., produced 75,000 units of product in 2012. Gower's management is estimating costs for 2013 on the basis of 2012 numbers. The following additional information is available for 2013. a. Direct materials prices in 2013 are expected to increase by 5 % compared with 2012. b. Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 10% in 2013 compared with 2012. C.Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change from 2012 to 2013. d. Depreciation costs are expected to increase by 5% , and rent, property taxes, and administration costs are expected to increase by 7 % . e. Gower expects to manufacture and sell 80,000 units in 2013 Questions (i) Complete the following table for 2012. Manufacturing cost classification for 2012: Variable Variable Total Cost Fixed Cost Cost Cost per unit Direct materials $300,000 Direct manufacturing labor 225,000 Power 37,500 Supervision labor 56,250 Materials-handling labor 60,000 Maintenance labor 75,000 Depreciation 95,000 Rent, property taxes, and administration 100,000 Total:

Answers

Manufacturing cost classification for 2012

Total Cost Variable Cost Fixed Cost Variable Cost per unit
Direct materials $300,000 $300,000 - $4
Direct manufacturing labor $225,000 $225,000 - $3
Power $37,500 $37,500 - $0.50
Supervising labor $56,250 $11,250 $45,000 $0.15
Materials-handling labor $60,000 $30,000 $30,000 $0.40
Maintenance labor $75,000 $30,000 $40,000 $0.40
Depreciation $95,000 - $95,000 -
Rent, property taxes and administration $100,000 - $100,000 -

Variable cost per unit = Total variable cost / 75,000 units

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