Question
Zeno Manufacturing Company has two departments, machining and finishing. For a given period, the following costs were incurred by the company as a whole:
Zeno Manufacturing Company has two departments, machining and finishing. For a given period, the following costs were incurred by the company as a whole: direct material, $350,000; direct labor, $180,000; and indirect production, $40,000. The grand total was $570,000. The machining department incurred 70% of the direct-material costs, but only 60% of the direct-labor costs. Indirect production costs amounted to $8,000 in the machining department and $32,000 in finishing. Three products were produced using the following proportions of direct material and direct labor in the two departments. (Click the icon to view the data for the three products.) As is commonplace, indirect production costs incurred by each department were allocated to products in proportion to the direct-labor costs of products within the departments. Read the requirements. Requirement 1. Compute the total costs incurred by the machining department and added by the finishing department. Machining Finishing Total Direct materials 245,000 $ 105,000 $ Direct labor 108,000 72,000 350,000 180,000 Indirect production $ 8,000 361,000 $ 32,000 209,000 $ 40,000 570,000 Total Requirement 2. Compute the total costs of each product that would be shown as finished-goods inventory if all the products were transferred to finished stock on completion. (There were no beginning inventories.) Begin by completing the table below to determine the total cost of producing the Alpha product. Alpha Direct Materials Direct Labor Indirect Production Total Machining Finishing Total Data table Product Direct Material Direct Labor Alpha 40% 10% Beta 10% 60% 50% 30% Gamma 100% 100% Total for the machining department Alpha Beta 30% 20% 60% 20% 10% 60% Gamma 100% 100% Total added by finishing department Print Done
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