One of All-Natural Inc.'s bestselling products is its fruit smoothie, which is manufactured in 15-galIon batches. Each
Question:
One of All-Natural Inc.'s bestselling products is its fruit smoothie, which is manufactured in 15-galIon batches. Each batch requires ten quarts of mixed berries. The mixed berries are sorted by hand before entering the production process, and because of imperfections, one quart of mixed berries is discarded for every five quarts of acceptable mixed berries. The standard direct labor sorting time to obtain one quart of acceptable mixed berries is four minutes. After sorting, mixed berries are blended with other ingredients; blending requires 15 minutes of direct labor time per batch. During the blending process, some product is lost because it adheres to the blending vats. After blending, the smoothie is packaged in 16-ounce containers. The following cost information is relevant:
- Mixed berries are purchased for \(\$ 1.25\) per quart.
- All other ingredients cost a total of \(\$ 0.80\) per gallon.
- Direct labor is paid \(\$ 10.00\) per hour.
- The total cost of material and labor required to package the smoothies is \(\$ 0.25\) per 16 -ounce smoothie container.
- Overhead is applied at a rate of \(\$ 20\) per machine hour. One-half hour of machine hour is the standard for a 15 -gallon batch of product.
Develop the standard cost for the cost components of a 15-gallon batch of fruit smoothies. The standard cost should identify standard quantity, standard price/rate, and standard cost per batch for each cost component.
Step by Step Answer:
Cost Accounting Foundations And Evolutions
ISBN: 9781618533531
10th Edition
Authors: Amie Dragoo, Michael Kinney, Cecily Raiborn