Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012
Note: Direct manufacturing labour costs at Euro-Medi comprise only 4.3%
of total production costs 101 + 201
%
Direct materials
€400,000 57.1%
Direct manufacturing labour 30,000 4.3
%
Manufacturing overhead allocated
270,000 38.6
%
€700,000 100.0%
2 Total conversion cost pool (€20,000 + €10,000 + €270,000)
=
€300,000 Total direct materials cost
(€100,000
+
€300,000)
=
€400,000 Conversion cost rate = €300,000 = 0.75 or 75%
of direct materials cost €400,000 Costs per instrument
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