Vocabulary
The total of the direct material cost and the direct labor cost
Prime cost
What is the formula for direct material/direct labor cost per item
______Cost______
Number of items
What is the formula used to find the break-even point?
Total fixed costs
Selling price - Variable Costs
What is the formula used to find the percent of defective units?
Number defective
Total number checked
Costs that are not changed by the number of units produced
Fixed costs
What is the formula for prime cost
Prime cost = direct material cost + direct labor cost
Selling price: $0.79
Variable cost: $0.29
Total fixed costs: $87,500
Find the break-even point in units
175,000 units
Number defective: 5
Number checked: 200
What is the percent defective?
2.5%
Costs that vary directly with the number of units produced
Variable costs
Cost per strip: $0.80
Pieces per strip: 10
Find the direct material cost per piece
$0.08
Selling price: $1.49
Variable cost: $0.74
Total fixed costs: $124,500
Find the break-even point in units
166,000 units
Number defective: 3
Number checked: 50
What is the percent defective?
6%
The point where income from sales equals the cost of production
Break-even point
Labor cost per hour: $17.45
Pieces per hour: 80
Find the direct labor cost per piece
$0.22
335,473 CDs
One hundred in sample
Five defective
In control if 6% or less
Is the process in or out of control?
(5%) In
Inspecting mass-produced items for defects
Quality control
36 boxes per sheet of cardboard
Cost: $3.60 per sheet
Direct labor charge: $12.60 per hour
200 boxes cut per hour
What is the prime cost per item?
$0.16
True Bounce basketballs are manufactured by General Sports. They have total fixed costs of $3,110,400. The variable cost per basketball is $18.47. The selling price per basketball is $24.95. What is the break-even point in number of basketballs?
480,000 basketballs
Alice McHenry is a quality control inspector for Nu-Age Cassettes. The process is in control if 6% or less of each sample is defective. McHenry checked a sample of 50 cassettes and found 4 defective cassettes. What percent of the sample is defective? Is the process in our out of control?
8%
Out