Office Productsâ (MOP) produces three different paper products at its Vaasa lumberâ plant: Supreme,â Deluxe, and Regular. Each product has its own dedicated production line at the plant. It currently uses the followingâ three-part classification for its manufacturingâ costs: directâ materials, direct manufacturingâ labor, and manufacturing overhead costs. Total manufacturing overhead costs of the plant in July are million â( million of which areâ fixed). This total amount is allocated to each product line on the basis of the direct manufacturing labor costs of each line. Summary dataâ (in millions) for July are asâ follows: Supreme Deluxe Regular
Direct material costs $89 $57 $60
Direct manufacturing labor costs $16 $26 $8
Manufacturing overhead costs $48 $78 $24
Units produced â 125 â 150 â 140

Required:
a. Compute the manufacturing cost per unit for each product produced in July 2017.
b. Suppose that, in August 2017, production was 150 million units of Supreme, 190 million units of Deluxe, and 220 million units of Regular. Why might the July 2017 information on manufacturing cost per unit bemisleading when predicting total manufacturing costs in August 2017?

1. Supreme $1.344 million per unit

Deluxe $1.17 million per unit

Regular $0.76 million per unit

2. VARIABLE COST have not been put in place for consideration

Explanation:

1.Computation for the manufacturing cost per unit for each product produced in July 2017.

Calculation for Supreme

SupremeTotal Fixed Costs = $15

Total Variable Costs =($89 + $16 + $48)

Total Variable Costs = $153

Units Produced = 125 units

Manufacturing Cost Per Unit = ($15 + $153)/(125 units)

Manufacturing Cost Per Unit=$168/125 units

Manufacturing Cost Per Unit = $1.344 million per unit

Calculation for Deluxe

DeluxeTotal Fixed Costs = $15

Total Variable Costs = ($57 + $26 + $78)

Total Variable Costs = $161

Units Produced = 150 units

Manufacturing Cost Per Unit = ($15 + $161)/(150 Units)

Manufacturing Cost Per Unit=$176/150 units

Manufacturing Cost Per Unit= $1.17 million per unit

Calculation for Regular

Regular Total Fixed Costs = $15

Total Variable Costs = ($60 + $8 + $24)

Total Variable Costs= $92

Units Produced = 140 units

Manufacturing Cost Per Unit = ($15 + $92)/(140

Units)

Manufacturing cost per unit=$107/140 units

Manufacturing cost per unit= $0.76 million per unit

2. The reason why we might say that the July 2017 information about manufacturing cost per unit might tend to mislead when total manufacturing costs is been predicted in the month of August 2017 is that VARIABLE COST have not been put in place for consideration .

answer; measurable outcome;