Operation costing (chapter appendix). Farkas Shoes, a high-end shoe manufacturer, produces two lines of shoes for women. The shoes are identical in design, but differ in the materials used and the trim added to the shoes. The basic shoes are made from a synthetic leather, have a synthetic insole, and have plain buttons decorating the upper. The elaborate shoes are made from genuine leather, have a special insole, and have creative buttons applied to the upper. Each shoe is assumed to use an identical amount of conversion costs for a given operation. Work orders 10399 and 10400 are representative work orders for the two types of shoes.

Selected budget information for February follows:

Budgeted conversion costs for each operation for February follow:

1. Using budgeted pairs of shoes as the denominator, calculate the budgeted conversion-cost rates for each of the six operations.

2. Using the information in requirement 1, calculate the budgeted cost of goods manufactured for the two February work orders.

3. Based on the two representative work orders for February, calculate the budgeted cost of each pair ofshoes.

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Farkas Shoes Selected Work Orders For the month ended 28 Feb 2009 Work order 10399 Work order 10400 Quantity (pairs of shoes) Direct Materials 150 1,000 Syn Leather Syn Insole Gen Leather FitDry Insole Plain Buttons Creative Buttons Operations 1. Cut leather Use Use 2. Shape leather Use Use Use Do nat use 3. Treat leather 4. Sew shoe Use Use Do not use 5. Machine application of buttons 6. Hand application of buttons Use Use Do not use