12. Using the cost of production report for decision making Aa Aa Premium Peanut
ID: 2477042 • Letter: 1
Question
12. Using the cost of production report for decision making Aa Aa Premium Peanut Butter Company has two departments: Mixing and Packaging. In the Mixing Department, all ingredients are added at the beginning of the process and mixed together. The Packaging Department receives the peanut butter and puts it in plastic containers that are already labeled. Premium Peanut Butter Company uses a process cost system. For the company, a unit is one jar of peanut butter. In the month of May, a crate of peanuts was spilled on the production floor in the Mixing Department, and workers were redirected to help clean up the spill. Output suffered because of the shutdown, and the cost of the extra materials and the labor charged to the cleanup effort are reflected in the results for May Complete the Cost of Production Report and the Per Unit Expense Comparisons for the Mixing Department. (Note: This problem contains check figures (V).) Premium Peanut Butter Company Cost of Production Report- Mixing Department For the months ending May 31 and April 30, 2013 April $562,500 % Change 15.0% 10.0% May Direct materials Direct labor 75,000 Factory overhead: Indirect labor 4,500 30,000 9,375 45,000 11,250 37,500 18,750 45,000 $750,000 1,800,000 -60.0% -20.0% -50.0% Utilities Repairs Depreciation Total product costs Units completed Cost per unit (V) 9.1% -10.0% 21.1% $0.505 Premium Peanut Butter Company Per-Unit Expense Comparisons- Mixing Department For the months ending May 31 and April 30, 2013 May April % Change Direct materials Direct labor Factory overhead $0.399 0.051 $0.313 0.042 Indirect labor Utilities Repairs Depreciation 0.003 0.019 0.006 0.028 $0.505 0.006 0.021 0.010 0.025 -50.0% -9.5% 0.0% Total cost per unit (V)Explanation / Answer
Premium Peanut Butter Company
Cost of production report - Mixing department
For the months ending May 31 and April 30, 2013
Premium Peanut Butter Company
Per unit expense comparisons - Mixing Department
For the months ending May 31 and April 30, 2013
High, Lower, Were higher , By 15% and 10%,
May April % change Direct materials $ 646,875 $ 562,500 15% Direct labor $ 82,500 $ 75,000 10% Factory overheads Indirect labor $ 4,500 $11,250 - 60% Utilities $ 30,000 $ 37,500 -20% Repairs $ 9,375 $ 18,750 -50% Depreciation $ 45,000 $ 45,000 - Total product costs $ 818,250 $ 750,000 9.1% Units completed 1,620,000 1,800,000 -10% Cost per unit $ 0.505 $ 0.417 21.1%Related Questions
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