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The Information bellow has been taken from production department of Dhofar Company for total units 5000 in November is as follows: Total Costs Variable Cost Fixed Cost Material used in Production OMR 550000 ? 0 Labor used in Production ? 475000 25000 (Assembly and supervisor) Production Facilities cost 80000 20000 ? (rent ,general, utilities,
The Information bellow has been taken from production department of Dhofar Company for total units 5000 in November is as follows: Total Costs Variable Cost Fixed Cost Material used in Production OMR 550000 ? 0 Labor used in Production ? 475000 25000 (Assembly and supervisor) Production Facilities cost 80000 20000 ? (rent ,general, utilities,..) Calculate: A. Find the missing information in the above table.. B. Calculate cost per unit C. Describe the production costs in the equation form Y = f + vX. D. Assume Dhofar intends to produce 8000 units next month. Calculate total production costs for the month no
Expert Solution
Answer:
Total Cost = Total Variable Cost + Total Fixed Cost
Accordingly, the missing figures are calculated.
A)
|
All Figures are in OMR |
|||
|
Total Costs |
Variable Cost |
Fixed Cost |
|
|
Material Used in Production |
550,000 |
5,50,000 |
0 |
|
Labour used in Production |
500,000 |
4,75,000 |
25,000 |
|
Production Facilities cost |
80,000 |
20,000 |
60,000 |
|
Total |
1,130,000 |
1,045,000 |
85,000 |
B) Cost per Unit = Total Cost / Units produced = OMR 1,130,000 / 5000units = OMR 226
C) Production Cost equation is Y = f + vX, where f = Total Fixed Cost ; v = Variable cost per unit ; X = Units produced.
Variable cost per Unit(VCp.u) = Total Variable Cost / Units produced = OMR 1,045,000 / 5000units = OMR 209
Referring from the table and the VCp.u,
Y = 85,000 + 209X
D) Calculation of Total Production Cost at Production of 8,000units next month
Y = 85,000 + 209 * 8000 = 85,000 + 1,672,000 = OMR 1,757,000
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