Exercise 6A-3 (30 minutes)
Supporting
Direct
Labor
Batch
Processing
Order
Processing
Customer
Service
Total
Total activity for the order …………………..
1,920
4
1
1
direct labor-
hours*
batches
order
customer
Manufacturing overhead:
Indirect labor …………………………………
$ 3,456
$288
$ 18
$ 0
$ 3,762
Factory equipment depreciation …………
14,112
13
0
0
14,125
Factory administration ……………………..
4,032
28
28
268
4,356
Selling and administrative:
Wages and salaries …………………………
960
52
153
1,864
3,029
Depreciation ………………………………….
0
3
6
26
35
Marketing expenses ………………………..
480
0
79
462
1,021
Total overhead cost …………………………..
$23,040
$384
$284
$2,620
$26,328
Example: $1.80 per direct labor-hour × 1,920 direct labor-hours = $3,456
*1,920 direct labor-hours = 0.8 direct labor-hour per seat × 2,400 seats
Exercise 6A-4 (continued)
6. While the company appears to have incurred a loss on its business with
Indus Telecom, caution must be exercised. The green margin on the
business was $3,100. Silicon Optics really incurred a loss on this
Problem 6A-5 (30 minutes)
1. The detailed cost analysis of local commercials appears below:
Activity Rates
Animation
Concept
Animation
Production
Contract
Administration
Technical staff salaries……………….
$3,500
$5,000
$1,800
Animation equipment depreciation .
600
1,500
0
Administrative wages and salaries ..
1,400
200
4,600
Supplies costs ………………………….
300
600
100
Facility costs …………………………...
200
400
100
Total ……………………………………..
$6,000
$7,700
$6,600
Animation
Concept
Animation
Production
Contract
Administration
Total
Activity level …………………………….
20 proposals
12 minutes
8 contracts
Technical staff salaries ………………..
$ 70,000
$60,000
$14,400
$144,400
Animation equipment depreciation ..
12,000
18,000
0
30,000
Administrative wages and salaries …
28,000
2,400
36,800
67,200
Supplies costs …………………………..
6,000
7,200
800
14,000
Facility costs …………………………….
4,000
4,800
800
9,600
Total cost ………………………………..
$120,000
$92,400
$52,800
$265,200
Example: $3,500 per proposal × 20 proposals = $70,000
