Question
Show answer to math Hershey's, Inc. is in the business of producing fruits. Hershey uses Time Driven ABC for its various types of hats. Information
Show answer to math
Hershey's, Inc. is in the business of producing fruits. Hershey uses Time Driven ABC for its various types of hats. Information related to Hershey's production processes are provided in tables. The process time to make Apples, Blueberries, and Grapes is the same for each unit type. Hershey only produces the three types of fruits in their production process. When using Activity based costing, Indirect Materials, Utilities, and Security are allocated by Material Dollars. Plant Manager Salary and Indirect Labor are allocated by Direct Labor Hours.
The number of minutes that are required to produce each unit are provided below:
Assembly: 1 minute
Pressing: 1.1 minutes
Finishing: 1.3 minutes
Cost Drivers: | Direct Material Dollars | Direct Labor Hours |
apple | $ 15,000 | 6,500 |
blueberry | $ 18,000 | 7,500 |
grapes | $ 17,000 | 6,000 |
The practical capacity of the factory is 300 hours every two weeks. The Factory could run theoretically run for all 336 hours over the two week period. Costs related to Hershey's overhead are given in the provided table.
REQUIRED:
If 2,000 Apples, 1,500 Blueberries, and 1,500 Grapes are produced, what is the overhead allocation for each unit using traditional ABC costing?
OH Items \begin{tabular}{|l|rr|} \hline Utilities & $ & 189,000.00 \\ \hline Plant Manager Salary & $ & 31,000.00 \\ \hline Security & $ & 87,000.00 \\ \hline Indirect Labor & $ & 243,000.00 \\ Indirect Materials & $ & 224,000.00 \\ \hline Total Overhead & $ & 774,000.00 \\ \hline \end{tabular} OH Items \begin{tabular}{|l|rr|} \hline Utilities & $ & 189,000.00 \\ \hline Plant Manager Salary & $ & 31,000.00 \\ \hline Security & $ & 87,000.00 \\ \hline Indirect Labor & $ & 243,000.00 \\ Indirect Materials & $ & 224,000.00 \\ \hline Total Overhead & $ & 774,000.00 \\ \hline \end{tabular}Step by Step Solution
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