A. Prepare cost sheets for each type of products.

Total Demand (units) 20,000 30,000

Class A Class B
Cost Particulars
(Athletes) (Working Class)

Direct Materials (Cost per unit)

Rubber compounds 300.00 240.00
Fabric/ Textiles 400.00 320.00
Laces/Eyelets 150.00 120.00
Rubber Soles 350.00 280.00
Foam 400.00 320.00
TOTAL DIRECT MATERIAL 1,600.00 1,280.00

Direct Labor (Cost per unit)

Cutter (50.00/hour) 100.00 100.00
Assembler (80.00/hour) 160.00 120.00
Machine Operator (60.00/hour) 60.00 48.00
TOTAL DIRECT LABOR 320.00 268.00

Manufacturing Overhead
Indirect Materials (per unit)
Adhesives 150.00 100.00
Cleaning Supplies 100.00 100.00
Packaging 300.00 240.00
Indirect Labor (per unit)
Supervisor's Salaries (40,000/month) 24.00 16.00

Quality Control Inspector (30,000/month) 36.00 12.00

Material Handlers (25,000/month) 15.00 10.00

Maintenance (18,000/ month) 21.60 14.40
Rent (125,000/ month) 15.00 15.00
Ulities(Water and Light- ave. of 12,000/ month) 1.44 1.44
Depreciation (20,000 /month) 2.40 2.40
TOTAL MANUFACTURING OVERHEAD 665.44 511.24
Selling and Other Administrative Exoenses 10.00 10.00

TOTAL COST PER UNIT: 2,595.44 2,069.24

B. Calculate total cost and per unit cost for each type of product.
Total Demand (units) 20,000 30,000
Class A Class B
Cost Particulars
(Athletes) (Working Class)
TOTAL DIRECT MATERIAL 1,600.00 1,280.00
TOTAL DIRECT LABOR 320.00 268.00
TOTAL MANUFACTURING OVERHEAD 665.44 511.24
Selling and Other Administrattive Exoenses 10.00 10.00

TOTAL COST PER UNIT: 2,595.44 2,069.24

Total cost per Class: 51,908,800.00 62,077,200.00

C. Determine the selling price for each type of product.

Class A Class B
(Athletes) (Working Class)
70 % Mark-up 50% Mark-up
TOTAL COST PER UNIT: 2,595.44 2,069.24
plus:Mark-up 1816.81 1034.62

Selling Price 4,412.25 3,103.86

D. Classify the different costs whether they are…

A.
B.
Cost Particulars (Material/
(Fixed/Variable)
Labor/ Factory)
Rubber Compounds
Fabric/ Textiles
Laces/Eyelets Material
Rubber Soles
Foam
Cutter (50.00/hour) Variable
Assembler (80.00/hour) Labor
Machine Operator (60.00/hour)
Adhesives
Cleaning Supplies
Packaging
Supervisor's Salaries (40,000/month)
Quality Control Inspector (30,000/month)
Factory
Material Handlers (25,000/month) (Includes Indirect Fixed
Maintenance (18,000/ month) materials &
Labor, Facility
Expenses)
 Factory
(Includes Indirect Fixed
materials &
Rent (125,000/ month) Labor, Facility
Expenses)
Mixed ( fixed &
Ulities(Water and Light- ave. of 12,000/ month)
Variable)
Depreciation (20,000 /month) Fixed
Mixed ( fixed &
Selling and Other Administrative Exoenses
Variable)

d. What is the importance of classifying such costs?

It is through classifying the cost of a product that we can make informed decisions. By categorizing
product cost into Material, labor, or factory, we can see whether the largest cost of a product is
associated. With this classification we can focus our efforts on areas that need thorough analysis to
improve our overall performance.

On one hand, classifying cost as to variability and controllability enhances our ability to manage cost,
there by finding cost reduction strategies and cost saving opportunities. It is through a well-
developed cost-sheet that we can evaluate performance and profitability. Having a detailed list of
costs will lead to having a good budget and forecast and will help us compare financial reports.

Briefly, knowing the nature and behavior of any cost is essential in decision-making, performance
evaluation, budgeting and forecasting, and cost control.
 50,000

Class C
(Students)

168.00
224.00
84.00
196.00
224.00
896.00

100.00
80.00
42.00
222.00

90.00
100.00
192.00 Basis of Indrect Labor:
Indi Annual Cost Quantity Total Annual Cost
9.60 Super 480,000.00 3 1,440,000.00

14.40 Quali 360,000.00 5 1,800,000.00

6.00 Mater 300,000.00 3 900,000.00

8.64 Main 216,000.00 6 1,296,000.00
15.00 Rent 1,500,000.00 1 1,500,000.00
1.44 Ulities(Water
144,000.00
and Light) 144,000.00
2.40 Depreciation
240,000.00 240,000.00
439.48
10.00 Selli 1,000,000.00 1,000,000.00

1,567.48
 50,000
Class C
(Students)
896.00
222.00
439.48
10.00

1,567.48

78,374,000.00

Class C
(Students)
20% Mark-up
1,567.48
313.50

1,880.98

C.
(Controllable/
Uncontrollable)
Controllable
Controllable
Controllable
Controllable
Controllable
Controllable
Controllable
Controllable
Controllable
Controllable
Controllable
Uncontrollable
Uncontrollable
Uncontrollable
Uncontrollable
 Uncontrollable

Controllable

Uncontrollable

Controllable

decisions. By categorizing
est cost of a product is
need thorough analysis to

s our ability to manage cost,

is through a well-
. Having a detailed list of
pare financial reports.

on-making, performance
Assumption:
1 Supervisor/class
2 Quality Control inspector for class A;
1 Quality Control inspector for class B;
2 Quality Control inspector for class C
1 Material Handler /class
2 Mantenance/ class
Total cost/Total Annual Demand
Total cost/Total Annual Demand
Total cost/Total Annual Demand
Total cost/Total Annual Demand