T&J manufacturing has a factory that produces custom kitchen cabinets. It has multiple product lines.

Materials and labor for the cabinets are determined by each job. To simplify the assignment, we will assume the following average costs.

The materials include $1,000 for the wood and other direct materials of $200. Both items listed are on a per job basis. It requires 20 hours of labor on average for a custom kitchen. The hourly rate is $10.

The sales price will be set at a markup of 65%.

The company estimates that it will have 16,000 direct labor hours in total for all product lines.

It assumes 800 units are sold on average per year. A breakdown of estimated yearly costs related to the kitchen cabinets follows:

 

Salaries-   office & administrative

$ 520,000

 

Salaries for factory personal:

$ 220,000

 

Office   Rent

$ 125,000

 

Factory Rent

$ 20,000

 

Office   Utilities and Misc office expenses(based on units sold)

$ 20,000

 

Sales   Travel(based on units sold)

$ 24,000

 

Insurance   – office

$ 12,000

 

Depreciation – office equipment

$ 40,000

 

Depreciation for factory equipment

$ 70,000

 

Advertising

$ 20,000

 

Sales   commissions(based on units sold)

$ 45,000

 

Factory Property taxes:

$ 10,000

 

Maintenance for factory equipment:

$ 80,000