There are 3 parts that make up a small toy car. Assembly takes 5 minutes. One in every 50…

There are 3 parts that make up a small toy car. Assembly takes 5 minutes. One in every 50…

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There are 3 parts that make up a small toy car. Assembly takes 5 minutes. One in every 50 motors is defective and one in every 100 wheels
is defective. You can determine if a part is defective before assembly and defective parts are thrown away. Each assembly worker gets paid
$15.00/hour. The employees get no benefits. You can assume that the employees are at a 25% tax rate. All other rates are at the normal
level. Employees are paid only when there is work to do.
Parts List:
Quantity Part
1
Body
Wheels
Motor $5.00
4
1
Cost
$ 1.00
$ 0.40
The costs to operate the factory include rent on the building and equipment of $4000/month and salary for a supervisor of $3000/month
(gross pay, so you’d need to calculate cost to company). Production is 100,000 per year.
1 What is the cost of material for one toy car?
2 What is the direct labor cost to make one toy car?
3 What is the fully allocated overhead cost per part?
4 What is the fully allocated total cost of a toy car?

Expert Answer:

Answer rating: 100% (QA)

SOLUTION 1 The cost of material for one toy car can be calculated as follows Cost of body 1 00 Cost
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