Missouri Office Products (MOP) produces three different paper products at its Vaasa lumber plant: Supreme, Deluxe,...

 
 

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Missouri Office Products (MOP) produces three different paper products at its Vaasa lumber plant: Supreme, Deluxe, and Regular. Each product has its own dedicated production line at the plant. It currently uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labor, and manufacturing overhead costs. Total manufacturing overhead costs of the plant in July 2017 are $190 million ($27 million of which are fixed). This total amount is allocated to each product line on the basis of the direct manufacturing labor costs of each line. Summary data (in millions) for July 2017 are as follows: (Click the icon to view the data.) Read the requirements. Requirement 1. Compute the manufacturing cost per unit for each product produced in July 2017. Begin by determining the formula needed to calculate the total manufacturing cost per unit. Direct material costs Direct manufacturing labor costs ▼ = Total manufacturing cost per unit Using the formula you determined above, calculate the company's total manufacturing cost per unit for each type of product produced in July 2017. (Round your answers to the nearest cent.) Total manufacturing cost per unit produced in July Supreme Deluxe Regular 144 163 139 Requirement 2. Suppose that, in August 2017, production was 90 million units of Supreme, 150 million units of Deluxe, and 170 million units of Regular. Why might the July 2017 information on manufacturing cost per unit be misleading when predicting total manufacturing costs in August 2017? During July 2017, the company incurred $190 million of manufacturing overhead costs, which includes a $27 million fixed cost component that will not fluctuate with changes in monthly production volume. This amount, which has been allocated to the total manufacturing costs of producing each product, affects the total manufacturing cost per unit amounts as calculated in requirement 1. Given the production volume decrease in August 2017, using the total manufacturing cost per unit amounts calculated for July 2017 will result in an overestimation of total manufacturing costs for August. Data Table Direct material costs Direct manufacturing labor costs Manufacturing overhead costs Units produced Supreme Deluxe Regular $ 82 $ 52 $ 62 $ 12 $ 29 29 $ 19 $ 50 $ 82 $ 58 50 110 10 90 Print Done X Missouri Office Products (MOP) produces three different paper products at its Vaasa lumber plant: Supreme, Deluxe, and Regular. Each product has its own dedicated production line at the plant. It currently uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labor, and manufacturing overhead costs. Total manufacturing overhead costs of the plant in July 2017 are $190 million ($27 million of which are fixed). This total amount is allocated to each product line on the basis of the direct manufacturing labor costs of each line. Summary data (in millions) for July 2017 are as follows: (Click the icon to view the data.) Read the requirements. Requirement 1. Compute the manufacturing cost per unit for each product produced in July 2017. Begin by determining the formula needed to calculate the total manufacturing cost per unit. Direct material costs Direct manufacturing labor costs ▼ = Total manufacturing cost per unit Using the formula you determined above, calculate the company's total manufacturing cost per unit for each type of product produced in July 2017. (Round your answers to the nearest cent.) Total manufacturing cost per unit produced in July Supreme Deluxe Regular 144 163 139 Requirement 2. Suppose that, in August 2017, production was 90 million units of Supreme, 150 million units of Deluxe, and 170 million units of Regular. Why might the July 2017 information on manufacturing cost per unit be misleading when predicting total manufacturing costs in August 2017? During July 2017, the company incurred $190 million of manufacturing overhead costs, which includes a $27 million fixed cost component that will not fluctuate with changes in monthly production volume. This amount, which has been allocated to the total manufacturing costs of producing each product, affects the total manufacturing cost per unit amounts as calculated in requirement 1. Given the production volume decrease in August 2017, using the total manufacturing cost per unit amounts calculated for July 2017 will result in an overestimation of total manufacturing costs for August. Data Table Direct material costs Direct manufacturing labor costs Manufacturing overhead costs Units produced Supreme Deluxe Regular $ 82 $ 52 $ 62 $ 12 $ 29 29 $ 19 $ 50 $ 82 $ 58 50 110 10 90 Print Done X

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ANSWER Working Statement Super Deluxe Regular Direct Material Cost 82 52 62 Direct Manufacturing Lab... View the full answer