Calculate the cost per unit of producing the canisters


(a) Research and Explain the phrase " DIRECTING MIND and WILL"

(b) Research and Explain the phrase "PIERCING THE CORPORATE VEIL"

MANAGEMENT ACCOUNTING ASSIGNMENT

The Playdough company currently produces 760,000 playdough canisters per year at its local plant as it sells the product in canisters. The details of the costs in producing the canisters are :

   Direct materials                                                                 $ 300,000
   Direct labour  12000 hrs at $15 per hr                                     180,000
   Variable overhead  $10 per direct labour hr                               120,000
   Fixed overhead $45 per direct labour hr                                    540,000
   Total cost                                                                        $ 1,140,000

The Playdough company has received an offer from the Cannister company to supply the cannisters at $1 per canister .The only fixed overhead that would be avoided would be $80,000 of supervisors salaries and $28,000 machinery depreciation .The remaining fixed overhead would continue to be incurred.

The Playdough company currently sell their canisters for $2.20 per canister.

Required:

(a) Calculate the cost per unit of producing the canisters under the traditional approach

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Managerial Accounting: Calculate the cost per unit of producing the canisters
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