Operation costing. Farkas Shoes, a high-end shoe manufacturer, produces two lines of shoes O. Budseted cost of goads man- for women. The shoes are identical in design, but differ in the materials used and the trim ufactured for work order 10399, added to the shoes. The basic shoes are made from a synthetic leather, have a synthetic insole,

$21,850 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.

REQUIRED 1. Using budgeted pairs of shoes as the denominator, calculate the budgeted conversion cost rates for eacl 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 of shoes.LO1

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Farkas Shoes Selected Work Orders For the Month Ended February 28, 2010 Quantity (pairs of shoes) Direct materials Work Order 10399 Work Order 10400 1,000 150 Synthetic leather Synthetic insole Plain buttons Genuine leather FitDry insole Creative buttons Operations 1. Cut leather Use Use 2. Shape leather Use Use 3. Treat leather Do not use Use 4. Sew shoes Use Use 5. Machine application of buttons 6. Hand application of buttons Use Do not use Do not use Use