60,000 15,000

simple lenses (S3) Complex lenses (C5)

total per unit total per unit total
[1] [2] = 1 / 60,000 [3] [4] = [3] / 15,000[5] = [1] + [3]
direct materials $1,125,000 $18.75 $675,000 $45 $1,800,000
direct manufacturing labo 600,000 $10.00 195,000 13 795,000
total direct costs $1,725,000 $28.75 $870,000 $58 $2,595,000
indirect costs allocated 1,800,000 30 585,000 $39 2,385,000
total costs $3,525,000 $58.75 $1,455,000 $97 $4,980,000
 (step 4) (step 3) (step 5)
budgeted budgeted
cost hierarchy total budgeted quantity of indirect
Activity category indirect costs cost allo base cost rate
[1] [2] [3] [4] [5] = [3] / [4]
design product sustainin $450,000 100 part square feet $4,500
setup molding machinebatch level $300,000 2,000 setup hours $150
machine operations output unit level $300,000 12,750 molding hours $24
shipment setup batch level $81,000 200 shipments $405
distribution output unit level $391,500 67,500 cubic feet deliver $6
administration facility sustaining $255,000 39,750 direct manuf labo $6
hours
 (step 5)
budgeted cause n effect
indirect allo base and
cost rate activity cost
[5] = [3] / [4] [6]
per part squer design increase when molds more complex
per setup hourindirect setup cost increase with setup hours
per mold hour indirect cost operate mold increase with molding hours
per shipment shipping costs incurred increase with number of shipment
per cubic delivdistribution cost increase with cubic feet of packages delivered
per direct labothe demand administrative resource increase with direct
hour manuf labor hour
 60,000 15,000
simple lenses (S3) Complex lenses (C5)
total per unit total per unit
cost desrciption [1] [2] = 1 / 60,000 [3] [4] = [3] / 15,000
Direct costs:
Direct materials $1,125,000 $19 $675,000 $45
direct manufacturing labor 600,000 10 195,000 13
direct mold cleaning & maintain co 120,000 2 150,000 10
total direct costs $1,845,000 $31 $1,020,000 $68
Indirect costs:
Design:
S3, 30 parts-sq.ft x $4,500 135,000 2.25
C5, 1,500 parts-sq.ft x $4,500 315,000 21
Setup of molding machines:
S3, 30 setup hours x $150 75,000 1.25
C5, 1,500 setup hours x $150 225,000 15
Machine operations:
S3, 900 mold machine hours x $5 450,000 7.5
C5, 3,750 mold machine hours x $550 187,000 12.46666667
Shipment setup:
S3, 100 shipments x $405 40,500 0.675
C5, 100 shipments x $405 40,500 2.7
Distribution:
S3, 45,000 cubic feet x $5,8 261,000 4.35
C5, 22,500 cubic feet x $5,8 130,500 8.7
Administration:
S3, 30,000 dir manuf labor x $6.4 192,453 3.20755
C5, 9750 dir manuf labor x $6.4151 62,547 4.1698
total indirect costs allocated 1,153,953 19.23255 960547 64.03646667
total costs 2,998,953 49.98255 1980547 132.0364667
 total
[5] = [1] + [3]

$1,800,000
795,000
270,000
$2,865,000

450,000

300,000

637,000

81,000

391,500

255,000

2114500
4979500