The foundry Gravelin produces castings. For each casting, materials cost 12 and direct labour 8. Variable production overheads for the period amount to 180,000 and fixed overheads to 540,000. The normal capacity used by Gravelin is 60,000 units castings; a prolonged shutdown of a furnace limited actual production to 45,000 units castings, a level considered abnormally low. Compute the unit production cost of the castings and the amount of unallocated fixed overheads.
- Materials per casting
- 12
- Direct labour per casting
- 8
- Variable production overheads
- 180,000
- Fixed production overheads
- 540,000
- Normal capacity (castings)
- 60,000
- Actual production (castings)
- 45,000