Bugaboo Co. manufactures three types of cookies: Fluffs, Crinkles, and Snaps. Th
ID: 2446540 • Letter: B
Question
Bugaboo Co. manufactures three types of cookies: Fluffs, Crinkles, and Snaps. The production process is relatively simple, and factory overhead costs are allocated to products using a single plantwide factory rate based on direct labor hours. Information for the month of May, Bugaboo's first month of operations, follows:
Bugaboo has budgeted direct labor costs for May at $8.50 per hour. Budgeted direct materials costs for May are: Fluffs, $0.75/unit; Crinkles $0.40/unit; and Snaps $0.30/unit.
Bugaboo's budgeted overhead costs for May are:
Assume that Bugaboo sells all the boxes it produces in May. Round your answers to two decimal places, if necessary.
a. Compute Bugaboo's plantwide factory overhead rate for May.
$_______per direct labor hour
b. Compute May's product cost for each type of cookie.
Budgeted Unit Volume Direct Labor Hours per unit Fluffs 80,000 boxes 0.10 Crinkles 60,000 boxes 0.20 Snaps 20,000 boxes 0.50Explanation / Answer
a. Total No. of Boxes = 80,000+60,000+20,000 = $1,60,000
Total Overhead Costs = $420,000
Overhead Rate = Total Overhead Costs/ Total No. of Boxes = $420000/160000 = $ 2.625
b. Calculation of Direct Labour costs per Product :
Fluffs= 80,000*0.10*8.5 = $68,000
Crinkles=60,000*0.2*8.5 = $1,02,000
Snaps=20,000*0.5*8.5 = $85,000
Direct Material Costs
Fluffs= 80,000*0.75 = $60,000
Crinkles=60,000*0.4 = $24,000
Snaps=20,000*0.3 = $6000
Product Overheads ( According to the overhead rate calculated above)
Fluffs= 80,000*2.625 = $2,10,000
Crinkles=60,000*2.625 = $1,57,500
Snaps=20,000*2.625 = $52,500
Total Costs per product :
Fluffs= $68,000 + $60,000 + $2,10,000 = $3,38,000
Crinkles=$102000+ $ 24000+ $ 157500 = $2,83,500
Snaps= $ 85,000 + $6000+ $52,500 = $1,43,500
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