1 Costing of a 100-unit batch of CS-29 carburetors:

Labor rate First proposal Rev

Department Hours Hours (%) per hour Overhead Rate Total
Casting / Stamping 21 17% $21.60 $31.37 $52.97 $1,112.4
Grinding 12 10% 18.00 30.14 48.14 577.7
Machining 58 46% 25.00 62.52 87.52 5,076.2
Assembly 35 28% 19.00 21.19 40.19 1,406.7
Total (Proposed) 126 100% $8,172.9
Total (Present) 126 $55.96 $7,051.0
Difference 1,121.9
Difference (%) 16%

2 Costing of spare parts for inventory:

Labor rate First proposal Rev
Department Hours Hours (%) per hour Overhead Rate Total
Casting / Stamping 304 18% $21.60 $31.37 $52.97 $16,102.9
Grinding 270 16% 18.00 30.14 48.14 12,997.8
Machining 1,115 66% 25.00 62.52 87.52 97,584.8
Total (Proposed) 1,689 100% $126,685.5
Total (Present) 1,689 $55.96 $94,516.4
Difference 32,169.0
Difference (%) 34%

3 Costing of work done for other divisions:

Labor rate First proposal Rev
Department Hours Hours (%) per hour Overhead Rate Total
Casting / Stamping 674 20% $21.60 $31.37 $52.97 $35,701.8
Grinding 540 16% 18.00 30.14 48.14 25,995.6
Machining 2,158 64% 25.00 62.52 87.52 188,868.2
Total (Proposed) 3,372 100% $250,565.5
Total (Present) 3,372 $55.96 $188,697.1
Difference 61,868.4
Difference (%) 33%
 Revised proposal
Overhead Rate Total
$31.52 $53.12 $1,115.5
28.75 46.75 561.0 Casting /
61.50 86.50 5,017.0 Stamping
Grinding
20.14 39.14 1,369.9
$8,063.4 Machining
$55.96 $7,051.0 Assembly
1,012.5
14%

Revised proposal
Overhead Rate Total
$31.52 $53.12 $16,148.5 Casting /
28.75 46.75 12,622.5 Stamping
61.50 86.50 96,447.5 Grinding
$125,218.5 Machining
$55.96 $94,516.4
Assembly
30,702.0
32%

Revised proposal
Overhead Rate Total
$31.52 $53.12 $35,802.9
28.75 46.75 25,245.0
61.50 86.50 186,667.0
$247,714.9
$55.96 $188,697.1
59,017.8
31%
Casting /
Stamping
Grinding

Machining

Assembly

Casting /
Stamping
Grinding

Machining

Assembly
 New machine cost $ 400,000.00
Useful Life 5
Depreciation per month $ 6,666.67

Q3.a
Present Method
S. No. Labor Cost
1 Casting/Stamping $ 54,604.00
2 Grinding $ 38,520.00
3 Machining $ 191,876.00
4 Custom Work
5 Labor Cost $ 81,664.00
6 Less: Labor Cost & Hour $ 24,499.20
7 Reduced Labor Cost & Hour (5-6) $ 57,164.80
8 Assembly $ 291,784.00
9 Total Labor $ 658,448.00
10 Less: Total Labor Cost $ 24,499.20
11 Reduced Total Labor Cost & Hour (9-10) $ 633,948.80
12 Overhead $ 1,099,323.00
13 Add: Depreciation $ 6,666.67
14 Less: Var Cost $ 4,507.85
15 New Overhead (12+13-14) $ 1,101,481.81
16 Total Labor and Overhead (11+15) $ 1,735,430.61
New Plant Hourly Rate $ 57.28

Q3.b
1st Proposed Method
Custom Work
Custom Overhead/ Hr $ 40.48
Labor Hours $ 3,712.00
Total Overhead $ 150,261.76
Additional Overhead with new machine $ 2,158.81
New Overhead Cost $ 152,420.57
Reduced Labor hours $ 2,598.40
Revised Overhead/Hr $ 58.66
Labor Rate/Hour $ 22.00
Total Cost/Hour $ 80.66

Q3.c
Total Cost under present method $ 207,723.52
Total Cost/Hr with new machine under present method $ 148,836.35
Decrease in Cost (in Dollars) $ 58,887.17
Reduction (in %) 28.35%
Total Cost under present method $ 207,723.52
Total Cost/Hr with new machine under 1st proposed method $ 209,585.37
Increase in Cost(in Dollars) $ 1,861.85
Increase (in %) 0.90%

Total Cost/Hr under 1st proposed method $ 231,925.76

Total Cost/Hr with new machine under 1st proposed method $ 209,585.37
Decrease in Cost(in Dollars) $ 22,340.39
Decrease (in %) 9.63%
Hours
2528.00 Custom Work Cost
2140.00
7675.00 Hourly Rate Labor Hour Cost
Before new machine $ 55.96 3712.00 $ 207,723.52
3712.00 After new machine $ 57.28 2598.40 $ 148,836.35
1113.60 Decrease (in $) $ 58,887.17
2598.40 Decrease (%) 28.35%
15357.00
31412.00
1113.60
30298.40

30298.40

Hourly Rate Labor Hour Cost

Current Method $ 55.96 3712.00 $ 207,723.52
After new machine $ 80.66 2598.40 $ 209,585.37
Increase (in Dollars) $ 1,861.85
Increase (%) 0.90%

Hourly Rate Labor Hour Cost

Before new machine $ 62.48 3712.00 $ 231,925.76
After new machine $ 80.66 2598.40 $ 209,585.37
Decrease (in Dollars) $ 22,340.39
Decrease (%) 9.63%