4 Question 1 (20 marks) a. In your own words define a cost object and give...

   

Transcribed Image Text:

4 Question 1 (20 marks) a. In your own words define a cost object and give 3 examples b. DoWeCheatem Inc. produces three different paper products at its St. Thomas plant- Great, Good, and Average. Each product has its own dedicated production line at the plant. The company currently uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labour, and indirect manufacturing costs. Total indirect manufacturing costs of the plant in May 2018 are $150 million ($10 million of which are fixed). This total amount is allocated to each product line on the basis of direct manufacturing labour costs of each line. Summary data (in millions) for May 2018 are Direct Material Cost Direct Manufacturing Labour Costs Indirect Manufacturing Costs Production (1) € Great $84 14 46 9 Kg Good $54 28 88 12 Kg Average $62 8 28 10 Kg Compute the total manufacturing cost per kilogram for each product produced in May 2018. Compute the total variable manufacturing cost per kilogram for each product produced in May 2018. Suppose that in June 2018, production was 12 million kilograms of Great, 16 million kilograms of Good, and 18 million kilograms of Average. Why might the May 2018 information on total manufacturing costs per kilogram be misleading when predicting total manufacturing costs in June 2018 4 Question 1 (20 marks) a. In your own words define a cost object and give 3 examples b. DoWeCheatem Inc. produces three different paper products at its St. Thomas plant- Great, Good, and Average. Each product has its own dedicated production line at the plant. The company currently uses the following three-part classification for its manufacturing costs: direct materials, direct manufacturing labour, and indirect manufacturing costs. Total indirect manufacturing costs of the plant in May 2018 are $150 million ($10 million of which are fixed). This total amount is allocated to each product line on the basis of direct manufacturing labour costs of each line. Summary data (in millions) for May 2018 are Direct Material Cost Direct Manufacturing Labour Costs Indirect Manufacturing Costs Production (1) € Great $84 14 46 9 Kg Good $54 28 88 12 Kg Average $62 8 28 10 Kg Compute the total manufacturing cost per kilogram for each product produced in May 2018. Compute the total variable manufacturing cost per kilogram for each product produced in May 2018. Suppose that in June 2018, production was 12 million kilograms of Great, 16 million kilograms of Good, and 18 million kilograms of Average. Why might the May 2018 information on total manufacturing costs per kilogram be misleading when predicting total manufacturing costs in June 2018

Answer rating: 100% (QA)

1COST OBJECT Cost object is anything for which cost is incuredIt is something to which cost can be assignedThe object can be a ... View the full answer