مبادئ حساب التكاليف الصناعية

ISE 304 Principles of Industrial Costing Exam 3 Sample

Instructions:

  • Asking questions or seeking explanation during the exam is prohibited

  • Unclear writing will not be graded

  1. From the plots below, which of direct labor hours, machine hours, or direct material cost should be used as a basis in computing the overhear rate and why?

    Manufacturing overhead and cost drivers

     

  2. For each factory given below, indicate whether the direct labor cost is constant or variable and whether the direct material cost is constant or variable.
    Factory Direct labor cost Direct material cost
    Cement, East Cement Plant    
    Oil production, Aramco    
    Air-conditioner assembly, Zamil Air    
    PC assembly, Advanced Electronics Co.    

     

  3. In a plant, there are three production departments. Based on their production forecast for 2010, the plant engineers have estimated the departmental direct labor costs, labor hours, and manufacturing overhead as follows:
    Department Labor cost (riyals) Labor hours    
    Fabrication 201,600 16,000    
    Assembly 72,960 6,400    
    Testing 37,440 3,200    
          Plant overhead 160,000 riyals

    A specific order will require 14,000 riyals of direct labor and 3,000 hours of direct labor. Find the overhead cost of this order using the basis of

    1. Direct labor cost
    2. Direct labor hour
  4. Al-Saifain Tires Factory in Jubail has two production departments for its two types of tiers manufactured for oil exploration trucks. The budgeted overhead for this year is 2,000,000 riyals and the budgeted direct labor cost is 160,000 riyals. The cost driver of the overhead is the direct labor cost. Manufacturing has received an order of 300 type-1 tires. The costs associated with this order are
    Direct labor cost Direct material cost
    32,000 51,000

    Compute the per-unit cost of type 1 tire.

  5. In a batch-based manufacturing process, there are three production stages or operations. The setup and cycle times per unit are as follows:
    Operation Setup time (minutes) Cycle time (minutes) Cost rate (Riyals per minute) Permanent tooling cost (riyals)
    1 15 3 13 120
    2 20 5 11.5 181
    3 17 4 13.2 160

    Manufacturing has received an order of 220 units. All the units are put in one batch.

    1. Compute the individual operation batch minutes.
    2. Compute the cost of all operations.

      The direct material cost per unit is 33 riyals.

    3. Find the cost per unit.
  6. Consider an assembly production line that has two stages:
    two stage production line
    The assembly standard times Ts are given.
    The plant applies an overhead rate equal to 12 riyals per direct labor hour. The labor wage in a stage is 10.5 riyals per hour. The direct materials cost is 8 riyals per unit of product. The plant has received an order of 600 units. Calculate the per unit manufacturing cost using the product cost estimation method.
  7. An assembly flow line has 7 workstations. The workstation setup times, setup cost rates, workstation cycle times, the workstation cost rates, workstation permanent tooling costs are
    Workstation Setup time (minutes) Setup cost rate (riyals per hour) Cycle time (seconds) Manufacturing cost rate (riyals per hour) Cost of permanent tooling (riyals per unit)
    1 54 2 29 3 0.5
    2 68 2 24 3.5 0.5
    3 48 2.5 13 3 0.6
    4 67 2.5 16 4 0.6
    5 60 2.5 15 4 0.5
    6 68 2 17 3.5 0.4
    7 64 2.5 32 3 0.4


    Direct materials cost per unit of product is 11 riyals. In a single run of the assembly line, 2,200 units are produced. Calculate the per-unit manufacturing cost of a product using the process costing method.

  8. Take this hypothetical production process for nondiscrete products
    joint cost
    The production mix is
    Product 1 20 tons
    Product 2 5 tons
    Product 3 12 tons
    How much each of the three products will incur from the two joint cost groups?
  9. The Saudi Shoe Factory in Dammam operates a batch-based production process for its baby shoes model. The production process has two operations and the data associated with these two operations are
    Operation 1    
    Standard time for manual setup   15 minutes
    Standard time for manual work   46 seconds
    Overhead rate   3 riyals per direct labor hour
    Tool cost   1 riyal per unit
         
         
    Operation 2    
    Standard time for manual setup   22 minutes
    Standard time for manual work   29 seconds
    Overhead rate   4.6 riyals per direct labor hour
    Tool cost   1.5 riyal per unit

    The direct labor wage is 12.4 riyals per hour and direct materials cost per unit is 30 riyals. Use the operation cost estimation method to compute the manufacturing cost associated with the production of 300 baby shoes.

  10. A specific tool is needed for manufacturing. The purchase cost of the tool is 5,200 riyals. The tool can be used to produce 3,000 units before it has to be replaced. The tool will require resharpening when it is used to produce 70 units or when the production is completed. The resharpening cost is 56 riyals, which includes uninstallation and installation cost of the tool. It is expected that the tool will save manufacturing 2 riyals per product in direct labor cost. If manufacturing will need to produce 100 product units, calculate the cost associated with the use of this tool for this order.
  11. Consider the overhead items and the corresponding overhead rate:
    Overhead items Overhead rate
    Land rent 10 riyals / labor hour
    Electricity 12 riyals / machine hour
    Repair personal 3 riyals / labor hour
    Material handling 4 riyals / labor hour
    Others 2 riyals / labor hour
    A specific order requires 450 labors hours and 700 machine hours. Calculate the overhead charge for this order.
  12. In the Factory of Juice and Ice Cream, three flavors of ice cream are produced: vanilla, chocolate, almond. Two production departments produce the basic ice cream materials that go into the production of the three flavors. The figure below illustrates the basic production process.
    joint costs
    The manufacturing cost in Department 1 is 50,000 riyals per day and it is 60,000 riyals in Department 2. The daily production volumes of the three types of ice creams are
    Vanilla : 1,500 kg
    Chocolate : 1,800 kg
    Almond : 900 kg
    Chocolate ice cream combines 44% of its ingredients from Department 1 and 56% from Department 2. Calculate the shares of the three ice cream flavors of the joint costs.
  13. Consider a two stage assembly process illustrated by this graph:

    Ts is the standard time in a stage. The overhead rate is set at 4 riyals per direct labor hour. The direct labor wage is 12 riyals per hour. Direct materials cost is estimated at 40 riyals per product unit. Manufacturing has received an order of 1,000 units, calculate the manufacturing cost associated with this order using product cost estimation method.
  14. A CNC machine was purchased two years ago for 250,000 riyals and is estimated to have a life of 5 years. At the end of the machine life, it can be sold for 5,000 riyals. Calculate the amount of cost added to the overhead per year attributed to the use of this machine.
  15. 5. In the Saudi Factory for Electronic Target Systems, production is customized as specified by customers. For this reason, the factory applies batch processing, which consists of three processes. For a specific order, the following information have been estimated:
    Process 1 2 3
    Overhead rate (riyals per labor hour) 19 17 10
    Process setup time (minutes) 18 16 22
    Standard time (seconds) 13 22 16
    The order size is 550 units. The direct materials cost is 7 riyals per product unit. The labor wage is 12 riyals per hour. Calculate the manufacturing cost associated with this order.

Instructor: Dr Muhammad Al-Salamah