Zhao Manufacturing Company has two departments, machining and finishing. For a given period, the following costs were incurred by the company as a whole: direct materials, $200,000; direct labour, $75,000; and indirect production, $80,000. The grand total was $355,000. The machining department incurred 70 percent of the direct materials costs, but only 33⅓ percent of the direct labour costs. As is commonplace, indirect production costs incurred by each department were allocated to products in proportion to the direct labour costs of products within the departments. Three products were produced.

The indirect production costs incurred by the machining and finishing departments and allocated to all products therein amounted to machining, $38,000 and finishing, $42,000.

Required

1. Compute the total costs incurred by the machining department and added by the finishing department.

2. Compute the total costs of each product that would be shown as finished-goods inventory if all the products were transferred to finished stock on completion. (There were no beginning inventories.)

Transcribed Image Text:

Product Direct Material Direct Labour Sigma 40% 30% Chi 30% 30% Delta 30% 40% Total for the machining department 100% 100% 335% Sigma 40% Chi 332% 40% Delta 332% 20% Total added by finishing department 100% 100%