I really need help with this question. I keep doing it wrong so can anyone help me please.
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The maori novelty company makes a variety of souvenirs for visitors to New Zealand. The Otago division manufactures stuffed kiwi birds using a highly automated operation. A recently installed activity based costing system has four acitivities:
Activity CostDriver Rate
Materials handling Kilograms of materials $1.20 per kg
Production setup # of setup $60 per setup
Cuttting, sewing etc # of units $0.40 per unit
Packaging and shipping #of orders $10 per order
Two products are called Standard kiwi and giant kiwi. They require 0.20 and 0.40 kg, respectively, at a material cost of 1.30 for standard kiwis and 2.20 for giant kiwis. One computer controlled assembly line makes all the products. When a production run of a different product is started, a setup procedure is required to reprogram the computers and make other changes in the process. Products are packed and shipped separately so a request from a customer for, say, 3 different products is considered 3 different orders Ausiland Waterfront market just placed an order for 100 standard kiwis and 50 giant kiwis.
1. Suppose the products made for Ausiland Waterfront required “AWM” to be printed on each kiwi. Because of the automated process, printing the initials takes no extra time or materials but it requires a special production setup for each product. Compute the cost of production.
To compute the cost of production for the order placed by Ausiland Waterfront Market, we need to take into account the material costs, production setup costs, and packaging and shipping costs.
Here's how you can calculate the cost for each component:
1. Material Costs:
- Standard Kiwis: 100 standard kiwis * 0.20 kg/kiwi * $1.20/kg = $24.00
- Giant Kiwis: 50 giant kiwis * 0.40 kg/kiwi * $1.20/kg = $24.00
2. Production Setup Costs:
- Standard Kiwis: 1 setup * $60/setup = $60.00
- Giant Kiwis: 1 setup * $60/setup = $60.00
3. Packaging and Shipping Costs:
- Standard Kiwis: 1 order * $10/order = $10.00
- Giant Kiwis: 1 order * $10/order = $10.00
Now, let's calculate the total cost of production:
Total Cost = Material Costs + Production Setup Costs + Packaging and Shipping Costs
For Standard Kiwis:
Total Cost = $24.00 (material) + $60.00 (setup) + $10.00 (packaging and shipping) = $94.00
For Giant Kiwis:
Total Cost = $24.00 (material) + $60.00 (setup) + $10.00 (packaging and shipping) = $94.00
Therefore, the cost of production for the order placed by Ausiland Waterfront Market is $94.00 for both Standard Kiwis and Giant Kiwis.