Question
how did the get the 1200 budgeted quantity of cost driver EgyptianEgyptian Spa produces two different spa products: RelaxRelax and RefreshRefresh. The company uses three
how did the get the 1200 budgeted quantity of cost driver
EgyptianEgyptian
Spa produces two different spa products:
RelaxRelax
and
RefreshRefresh.
The company uses three operations to manufacture the detergents: mixing, blending, and packaging.
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(Clickthe icon to view the additional information.)The budgeted number of containers and expected direct materials and the budgeted conversion costs for
MayMay
are as follows:
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(Clickthe icon for the budget information.)Read therequirements
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.
Requirement 1. Calculate the conversion cost rates for each department.
Determine the formula and then calculate the conversion cost rate for each department. (Round the conversion cost rate to the nearest cent.)
|
| Budgeted conversion cost | / | Budgeted quantity of cost driver | = | Conversion cost rate |
| Mixing | $11,760 | / | 1,200 | = | $9.80 |
| Blending | / |
| = |
|
Enter any number in the edit fields and then click Check Answer.
| Clear All | Check Answer |
More Info
Because of the materials used,
RelaxRelax
is produced in powder form in the mixing department and then transferred to the blending department and then onto packaging.
RefreshRefresh
is produced in liquid form in the blending department and is then transferred to packaging.
EgyptianEgyptian
Spa applies conversion costs based onlabor-hours in the mixing department. It takes
33
minutes to mix the ingredients for a container of
RelaxRelax.
Conversion costs are applied based on the number of containers in the blending departments and on the basis of machine-hours in the packaging department. It takes
0.50.5
minutes of machine time to fill acontainer, regardless of the product.
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More Info
The budgeted number of containers and expected direct materials cost for each product are as follows:
|
| Relax | Refresh | ||||
| Number of containers | 24,000 |
| 18,000 | |||
| Direct materials cost | $17,160 |
| $13,140 | |||
The budgeted conversion costs for each department for
MayMay
are as follows:
| Allocation of | Budgeted | ||
| Department | Conversion Costs | Conversion Cost | |
| Mixing | Direct labor hours | $11,760 | |
| Blending | Number of containers | $20,160 | |
| Packaging | Machine hours | $2,800 | |
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