Answered

Welcome to Westonci.ca, the Q&A platform where your questions are met with detailed answers from experienced experts. Our platform offers a seamless experience for finding reliable answers from a network of knowledgeable professionals. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.

Smelly Perfume Company manufactures and distributes several different products. The company currently uses a plantwide allocation method for allocating overhead at a rate of $7 per direct labor hour. Cindy is the department manager of Department C which produces Products J and P. Department C has $16,200 in traceable overhead. Diane is the department manager of Department D which manufactures Product X. Department D has $11,100 in traceable overhead. The product costs (per case of 24 bottles) and other information are as follows:

J P X
Direct materials $100.00 $ 72.00 $48.00
Direct labor 42.00 31.50 12.00
Overhead 28.00 21.00 14.00
$170.00 $124.50 $74.00
Machine hours 4 2 3
Number of cases (per year) 300 500 600

1. If Smelly changes its allocation basis to machine hours, what is the total product cost per case for Product P?

a. $163.50
b. $144.00
c. $138.15
d. $117.15

2. If Smelly changes its overhead allocation to departmental rates, what is the product cost per case for Product P assuming Departments C and D use direct labor hours and machine hours as their respective allocation bases?

a. $117.15
b. $163.50
c. $131.50
d. $138.15

Sagot :

anthougo

Answer:

Smelly Perfume Company

1. a. $117.15

2. $115.95

Explanation:

a) Data and Calculations:

                                                J              P            X         Total

Direct materials              $100.00  $ 72.00   $48.00

Direct labor                        42.00       31.50     12.00

Overhead                          28.00       21.00     14.00

                                       $170.00  $124.50  $74.00

Direct labor hours per unit   4              3           2

Total direct labor hours    1,200          1,500     1,200      3,900

Machine hours per unit        4              2           3

Total machine hours        1,200          1,000     1,800      4,000

Number of cases (per year) 300        500      600

Department                                C                    D              Total

Traceable overheads           $16,200            $11,100    $27,300

Product costs (machine hours):

Predetermined overhead rate based on machine hours = $6.825 ($27,200/4,000) per machine hour

                                                J              P            X

Direct materials              $100.00  $ 72.00   $48.00

Direct labor                        42.00       31.50     12.00

Overhead (machine hour) 27.30      13.65     20.48

                                       $169.30    $117.15   $80.48

Product costs (departmental overhead rates):

Departmental overhead rates per hour:

Department C  $4.15 ($16,200/3,900) per labor hour

Department D $2.78 ($11,100/4,000) per machine hour

                                                J              P            X

Direct materials              $100.00  $ 72.00   $48.00

Direct labor                        42.00       31.50     12.00

Overhead                           16.60       12.45       8.34

                                      $158.60   $115.95   $68.34

Thank you for your visit. We are dedicated to helping you find the information you need, whenever you need it. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. We're here to help at Westonci.ca. Keep visiting for the best answers to your questions.