Question
Please do part a and b. For part b i am not sure if it is plant wide, departmental or the ABC method? Assume New
Please do part a and b. For part b i am not sure if it is plant wide, departmental or the ABC method?
Assume New Belgium Brewing Company manufactures and distributes three types of beer and that estimated per unit product costs and related information for the next year are shown in the following table: Blue Paddle Somersault Cocoa Mole Ale Cost data per unit: Direct materials Direct labor Overhead Total product cost per unit $100,000 $3,600 $12.000 $115.600 $500.000 $4.800 $16,000 $520,800 $750,000 $6,000 $20,000 $776.000 Machine hours per unit Number of units produced per year 30 MH 30 units 40 MH 20 units 50 MH 10 units a. If New Belgium Brewing Company uses a plantwide overhead rate based on machine hours, what is the overhead cost per unit? How much overhead is assigned to Cocoa Mole Ale? What is the total product cost per unit of Cocoa Mole Ale? b. Blue Paddle is a traditional brew made in large quantities with long production runs. Somersault is a seasonal beer made in small batches. Cocoa Mole Ale is a specialty beer also made in small batches. Which of the overhead allocation methods studied in this chapter would you recommend that New Belgium Brewing Company use and why?
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