Shringar Industries is a leading manufacturer of cosmetic products. The following data concern one of the firm€™s products:

You know that Shringar allocates factory overhead based on labor cost and that the charge for selling and administration cost is 35% of factory cost. Digging deeper, you learn that direct departmental overhead comprises supplies and other consumables. The indirect overhead is traceable to the product as it represents the cost of direct supervision.

Required:
Shringar has been producing 10,000 units per month. Suppose, for the next month alone, the firm wishes to increase its level of production from 10,000 to 11,500 units per month. Determine the controllable costs the firm should use for this decision. That is, what is the cost of increasing production by 1,500units?

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Sales Volume ltem 10,000 units12,000 units $2.50 2.14 0.45 2.50 2.14 0.45 2.58 2.14 9.81 .43 $13.24 Direct materials + Direct labor +Departmental overhead: Direct + Departental overhead: Indirect Factory overhead Factory cost 2.14 10.33 3.62 $13.95 +Selling& administration overhead Total cost per unit