2. 10.00 points Main Street Ice Cream Company uses a plantwide allocation method

Question

2. 10.00 points Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $2 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 Direct labor (per 1,000 gallons) Raw materials (per 1,000 gallons) 755 $830 $1,130 605 Required If the number of hours of labor per 1,000 gallons is 56 for strawberry, 66 for vanilla, and 100 for chocolate, compute the total cost of 1,000 gallons of each flavor using plantwide allocation. Vanila Chocolate bCharlene's department uses older, outdated machines.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: Overhead $14.274 6,500 18,300 75,750 25.250 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.) Department SV Department C per machine hour per labor hour

Explanation / Answer

b.

Department SV has an overhead allocation rate of $3 per machine-hour ($75,750÷ 25,250 machine hours). Department C has an overhead allocation rate of $0.78 per labor-hour ($14,274 ÷ 18,300 labor-hours

c.

Strawberry Vanilla Chocolate Direct Labor (per 1,000 gallons 755 830 1130 Raw materials( per 1,000 gallons) 805 505 605 Overhead 112 132 200 Total cost 1672 1467 1935

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