Question

1. 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			Chocolate
Direct labor (per 1,000 gallons)	$	752		$	827		$	1,127
Raw materials (per 1,000 gallons)		802			502			602

Required:

a. If the number of hours of labor per 1,000 gallons is 55 for strawberry, 60 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b. Charlene's department uses older, outdated machines.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:

	Department SV			Department C
Overhead	$	95,836		$	20,880
Machine-hours		25,220			36,200
Labor-hours		25,220			18,000

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.)

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, 55; vanilla, 60; and chocolate, 152. Direct labor-hours by product remain the same as in requirement (a).

Answer 1

Page No. Date - Angal calculation of total cost of 2000 gallory of each glaw or using folant wide allocation. Particulary Direct labour cost | Raw material cost Stawberry 752 802 vanilla 827 - 502 Chocolate 127 602 Overhead cost @ 165 $3 ber labour hour (55x3) 100 (box 3) 150 (5013) Total cost 1719 1509 1879 Amb) Calculation of overhead Rate For Deparment sv on the basis of machine hows. I overhead Rate = Total overhead - Total machine howy - $95836 25220 = $3.8 fer per machine hour for Depourment hour Con the basis of Direct labour Overhead Rate - Total overhead Total Direct labour

Page No – Date $20880 18 000 - $1116 ber direct labown hour, And calculation of total cost of each Havour of Lice cream. - Cind) en Particulary Stawberry vanilla Chocolate... Labour cost 827 1127 Rawmaterial cost 802 502 Goa overhead cost Cwru. २०१ २२8 50 32 total cost 1763 1557 1787 WN: Vanilla Chocolate. 1660138 228 Cateulation of overhead cost Particulars stawberry overhead Rate for Stawberry Juanilla, @3.8 ber machine. hour (Calculated in 255x3.8 209 barth overhead Rate Chocolate@ $116 per direct labour howr. (Calcantater inparts) total १ (50x11658 % 58