The company San Judas Tadeo SAC receives an order to produce 02 class kitchens: Economic and Standard. In the month of January a production order "A" is issued for the economic class for 10 units and another "B" for the standard class for 20 units.

It is controlled by classes, at the end of the period there is no production in process and the costs incurred are:

Raw Material: Order "A" 12,000

Order “B” 35,000 S /. 47,000

Labor: Order "A" 3,000 Hrs. ACE/. 11.00

Order "B" 9,500 Hrs. ACE/. 11.00

Manufacturing Expenses: S /. 48,000

Applicable to orders based on direct hours worked

Selling and Administrative Expenses S /. 60,000

All production is sold with a profit margin of 40% on the manufacturing cost.

It is requested:

Apply manufacturing costs.

Determine the unit cost per class.

Determine the cost of production and calculate the sale value.

Solution of the Practical Case: Costs for Purchase Orders

Manufacturing expenses	=	S /. 48,000	=	S /. 3.84
Total hours	12,500

Order "A": 3,000 hrs

Order "B": 9,500 hrs

12,500 hrs

Order "A"

Concept	MP	MOD	Indirect Manufacturing Expenses	TOTAL
MP	12,000			12,000
MOD		33,000 (3,000 x 11)		33,000
GF			11,520 (3,000 x 3.84)	11,520
	12,000	33,000	11,520	56,520

Order "B"

Concept	MP	MOD	Indirect Manufacturing Expenses	TOTAL
MP	35,000			35,000
MOD		104,500 (9,500 x 11)		104,500
GF			36,480 (9,500 x 3.84)	36,480
	35,000	104,500	36,480	175,980

∑

47,000

137,500

48,000

232,500

Total Production = 56,520 + 175,980 = S /. 232,500

Order "A":

Production costs	=	S /. 56,520	=	S /. 5,652
Units produced	10

Order "B":

Production costs	=	S /. 175,980	=	S /. 8,799
Units produced	twenty

Determining the Production Cost:

Inv. Initial of Products in process		S /. 0.00
MP consumption	S /. 47,000
MOD consumption	137,500
CIF consumption	48,000		S /. 232,500.00
(-) Inv. End of Products in process		S /. 0.00
Production cost	S /. 232,500.00