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A business produces various types of laundry detergents in Thinning, Mixing and Packing departments. The soap is first powdered at the Thinning department, whitener added
A business produces various types of laundry detergents in Thinning, Mixing and Packing departments. The soap is first powdered at the Thinning department, whitener added at the Mixing department and then packed at the Packing department. A special detergent order coded as WM120 consists of 2.000 kg. The manufacturing process of this new order spread on the second and third weeks of the month. Compute the applicable unit sale prices of the special order by 60% profit on the unit cost and 50% profit on the unit sale price.
The usual direct material as soap, special whitener and packing material purchase and usage information are given below. The cost of the soap has to be calculated with the most accurate method.
DIRECT MATERIAL:
1.3.2008Soap inventory300 Kg24,00 $/Kg
3.3.2008Soap purchase200 Kg21,00 $/Kg
5.3.2008Packing material purchase2000 Units0,50 $/Unit
6.3.2008Soap Use400 Kg
8.3.2008Whitener purchase150 Kg40,00 $/Kg
9.3.2008Soap purchase500 Kg19,00 $/Kg
11.3.2008Soap use250 Kg
15.3.2008Soap use150 Kg
16.3.2008Whitener use 50 Kg
19.3.2008Packing material use2.000 Units
21.3.2008Soap purchase100 Kg17,00 $/Kg
29.3.2008Soap use200 Kg
DIRECT LABOR:
Employee numbers, work hours by week and the wages per hour are shown below:
1. Week5 Employees48 H/Week 12 $/DLH
2. Week8 Employee48 H/Week15 $/DLH
3. Week4 Employees48 H/Week14 $/DLH
4. Week3 Employees48 H/Week16 $/DLH
MANUFACTURING OVERHEADS SECOND ALLOCATION:
Second apportionment totals are given below, service departments costs allocation to production departments will be made by also most reliable method.
Factory overheads first apportionment: Totals DMH/Month Control Hours
Thinning Department8.600 $ 76855
Mixing Department5.900 $ 1.05666
Packing Department3.200 $ 26422
Maintenance Department (DMH)2.300 $176 44
Accounting and Control (Control hours)3.800 $ 88 12
MANUFACTURING OVERHEADS ABSORPTION (THIRD ALLOCATION:
Third apportionment (absorption) or production departments costs allocation to cost objects will be made with the cost drivers given below:
Thinning Department with the soap quantity used during the period,
Mixing Department with the Direct Labor Hours of the month,
Packing Department with the units of production, 5.350 Kg detergents are produced during the period.
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