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Helen Corporation manufactures a variety of skin and beauty products, including its best-selling product, a hydrating lotion. In addition to tracking direct costs for all
Helen Corporation manufactures a variety of skin and beauty products, including its best-selling product, a hydrating lotion. In addition to tracking direct costs for all of its products, Helen allocates MOH costs by using one plant-wide MOH rate based on DL costs. Total MOH costs are budgeted to be $1,805,000, while total DL costs are estimated at $500,000. After discussions with her peers, the controller at Helen decides to break down the MOH costs into key activities, as shown below. Perhaps if she allocates the company's MOH costs using more detailed rates and cost drivers, she will have more accurate cost information with which to make better future decisions. Allocate MOH costs to Helen's lotion product using the activity-based rates, recognizing the actual usage of the four activity drivers was as follows. 500 setup hours 8,000 machine hours 2,000 inspection hours 18,600 packaging hours
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