Falcon Crest Corporation manufactures two brands of wine: Regular and Extra Rich

Question

Falcon Crest Corporation manufactures two brands of wine: Regular and Extra Rich Below is the current year production data for the company Regular Extra Rich Direct material in pounds Direct labor hours Machine hours Number of setups Number of gallons produced 225,000 45,000 36,000 1,450 450,000 110,000 65,000 24,000 2,375 90,000 The 335,000 pounds of material had a total cost of $753,750. Direct labor is $21 per hour. The company has total overhead production costs of $2,212,125. a. If Falcon Crest Corporation applies factory overhead using direct labor hours, compute the total production cost and the unit cost for each brand b. If Falcon Crest Corporation applies factory overhead using machine hours, compute the total production cost and the unit cost for each brand.

Explanation / Answer

a) Calculate total production cost and unit cost under direct labour hour method :

b) Calculate total production cost and unit cost under machine hour method :

Regular Extra rich Direct material 506250 247500 Direct labour cost 945000 1365000 Overhead applied 2212125/110000*45000 = 904960 2212125/110000*65000 = 1307165 Total production cost 2356210 2919655 No of gallon 450000 90000 Unit product cost 5.24 32.44

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