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Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $3 per labor-hour. Strawberry
Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $3 per labor-hour. Strawberry and vanilla flavors are produced in Department SV. Chocolate is produced in Department C. Sven manages Department SV and Charlene manages Department C. The product costs (per thousand gallons) follow. Strawberry Vanilla $ 832 807 507 Direct labor (per 1,000 gallons) Raw materials (per 1,000 gallons) $757 Chocolate $1,132 607 Required: a. If the number of hours of labor per 1,000 gallons is 60 for strawberry, 65 for vanilla, and 50 for chocolate, compute the total cost of 1,000 gallons of each flavor using plantwide allocation. b. Charlene's department uses older, outdated machines. She believes that her department is being allocated some of the overhead of Department SV, which recently bought state-of-the-art machines. After she requested that overhead costs be broken down by department, the following information was discovered: Overhead Machine-hours Labor-hours Department SV $90,972 25,270 25, 270 Department C $27,750 36,700 18,500 Using machine-hours as the department allocation base for Department SV and labor-hours as the department allocation base for Department C, compute the allocation rate for each. c. Compute the cost of 1,000 gallons of each flavor of ice cream using the department allocation rates computed in requirement (b) if the number of machine-hours for 1,000 gallons of each of the three flavors of ice cream are as follows: strawberry, 60; vanilla, 65; and chocolate, 157. Direct labor-hours by product remain the same as in requirement (a). Required A Required B Required If the number of hours of labor per 1,000 gallons is 60 for strawberry, 65 for vanilla, and 50 for chocolate, compute the total cost of 1,000 gallons of each flavor using plantwide allocation. Total Cost Strawberry Vanilla Chocolate Required A Required B Required Using machine-hours as the department allocation base for Department SV and labor-hours as the department allocation base for Department C, compute the allocation rate for each. (Round your answers to 2 decimal places.) Allocation Rate Department SV Department C per machine hour per labor hour Required A Required B Required C Compute the cost of 1,000 gallons of each flavor of ice cream using the department allocation rates computed in requirement (b) if the number of machine-hours for 1,000 gallons of each of the three flavors of ice cream are as follows: strawberry, 60; vanilla, 65; and chocolate, 157. Direct labor-hours by product remain the same as in requirement (a). Total Cost Strawberry Vanilla Chocolate
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