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| Topic: |
Business
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| Number of pages / Number of words: |
5 / 1236 |
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This works out at $605. To calculate the direct costs of materials etc, we can take the cost per week he working and deduct the overhead cost.
10 week overhead when no work being done (a) $ 6050
Overhead per week (b) (a / 10) 605
Costs for a 5 bundle week (c) 2800
Material costs (d) (c – b) 2195
Material costs for the year (b x 40) 87,000
We are also given Sam’s wages and the packaging figures separately, these are indirect costs and are easier to account for...
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“Usually the cost of the building and other overheads are fixed costs and are normally calculated as the cost of goods sold†(www.wikipedia.org). If we assume the 5 bundles a week average giving us 200 bundles a year we can calculate the rest of the costs.
Other costs Per week Total
Overheads $605 $31,400
Packaging 80 16,000
Sam’s Wages 300 12,000
Total Costs 59,400
This includes factory costs, Sam’s wages at $15 per hour for 20 hours a week, making $300 a week wages, but only for 40 weeks...
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