Question
Hewtex now allocates committed costs based on flexible labor costs. A study has determined that committed costs are as follows: (1) supervisory costs for tape
Hewtex now allocates committed costs based on flexible labor costs. A study has determined that committed costs are as follows: (1) supervisory costs for tape recorder production $500,000 (2) supervisory salaries for electronic calculator production $600,000 (3) the balance of the committed costs are proportional to the number of batches of production. Hewtex schedules tape recorders for production in batches of 1,000 and electronic calculators are made in batches of 10,000. Finally $300,000 of what was originally classified as facility sustaining cost was actually attributable to tape recorders and $400,000 was attributable to the electronic calculator line. Recast the original financial statements to correct the costing errors due to misclassification.
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