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

Question:

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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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