Cost Analysis of Thomas SLU Flowerpot Company: A Case Study
Review of Business Project: Recovery Costs
Thomas SLU Flowerpot Company
This document outlines the cost analysis for Thomas SLU Flowerpot Company, a manufacturer of treated wood containers. We will calculate the costs under the full costing system, considering both direct and indirect costs.
Departmental Breakdown
The company operates with the following departments:
- Treated Wood Store (activity measured by man-hours)
- Cutting (activity measured by man-hours)
- Assembly (activity measured by man-hours)
- Finished Goods Warehouse (activity measured by units sold)
- Marketing (activity measured by units sold)
- Maintenance (activity measured by man-hours)
- Administration (activity measured by man-hours)
- Subactivity (activity measured by man-hours)
Indirect Costs
The company incurred the following monthly indirect costs:
1. Indirect Labor (Monthly)
- Treated Lumber Yard Charge: €1125.06
- Treated Wood Cutting Charge: €1035.89
- Assembly Responsible: €1291.47
- Finished Products Warehouse Charge: €1150
- Maintainer: €1924.57
- Chief of Administration: €975.25
2. Electricity (Bimonthly): €1095
Consumption breakdown:
- Treated Wood Court: 285 kw
- Assembly: 325 kw
- Marketing: 6 kw
- Maintenance: 35 kw
- Administration: 15 kw
- Subactivity: 4 kw
3. Water Consumption (Monthly): €145
Consumption breakdown:
- Administration: 85 liters
- Maintenance: 15 liters
- Subactivity: 2 liters
4. Annual Depreciation
- Treated Wood Store: €480
- Treated Wood Court: €2808
- Assembly: €7520
- Finished Goods Warehouse: €1044
- Marketing: €890
- Maintenance: €1908
- Administration: €960
- Subactivity: €282
Maintenance Section Breakdown
The maintenance section’s hours were distributed as follows:
- Treated Wood Court: 35 hours
- Treated Wood Store: 18 hours
- Assembly: 627 hours
- Finished Goods Warehouse: 6 hours
- Marketing: 75 hours
- Maintenance (itself): 105 hours
- Subactivity: 64 hours
Production and Sales
This month, SLU Tomas Flowerpot Company produced:
- 138 pots of 60×60
- 646 pots of 50×50
- 1,950 pots of 40×40
Departmental Work Breakdown (in hours)
| Department | 60×60 Pots | 50×50 Pots | 40×40 Pots |
|---|---|---|---|
| Treated Wood Store | 197 | 279 | 439 |
| Treated Wood Court | 887 | 937 | 1826 |
| Assembly | 495 | 815 | 890 |
| Finished Goods Warehouse | Based on units sold | ||
| Marketing | Based on units sold | ||
| Administration | 250 | 450 | 800 |
| Subactivity | 120 | 20 | 60 |
Direct Costs in Manufacturing
1. Labor
- 60×60 pots: 395 hours at €2.63/hour
- 50×50 pots: 450 hours at €2.63/hour
- 40×40 pots: 855 hours at €2.63/hour
2. Raw Material
- Treated Wood:
- 60×60 pots: 3.78 linear meters/pot at €3.725/meter
- 50×50 pots: 3.24 linear meters/pot at €3.725/meter
- 40×40 pots: 2.7 linear meters/pot at €3.725/meter
- Screws:
- 60×60 pots: 70 screws/pot at €0.225/screw
- 50×50 pots: 60 screws/pot at €0.225/screw
- 40×40 pots: 50 screws/pot at €0.225/screw
Sales Prices
- 60×60 pots: €51.50 each
- 50×50 pots: €40.80 each
- 40×40 pots: €29.50 each
Calculations
Based on the provided information, the following needs to be calculated:
- Allocation of indirect costs to divisions (1.5 points)
- Breakdown of ancillary costs to the main sections (2 points)
- Monthly indirect unit costing (2 points)
- Monthly direct unit cost calculation (1.5 points)
- Monthly total unit cost calculation (1 point)
- Calculation of the result of a month (2 points)
Note: This document provides a structured format for the cost analysis. Further calculations and analysis are required to determine the specific cost elements and profitability of Thomas SLU Flowerpot Company.