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.

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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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