BUS 207 Assignment 4, Chapter 18, Problem Olney Health Bars Corporation makes a
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Question
BUS 207 Assignment 4, Chapter 18, Problem
Olney Health Bars Corporation makes a delicious chocolate fruit/nut bar enjoyed at Saxby’s Coffee stores. This product passes through three production processes: mixing the ingredients, forming the product, and packaging. The company uses process costing.
The following are data concerning the costs incurred in each process during February, along with the number of units produced:
Mixing
Forming
Packaging
Direct materials
$ 35,000
$0
$3,800
Direct labor
$50,000
$40,000
$14,000
Manufacturing overhead
$45,000
$50,000
$7,000
Output
20,000 lbs.
40,000 dozen
4,000 cases
To ensure safety of the product, all Olney Health Bars are mixed, formed, and packaged on the same day. Therefore, the company has no inventory in process at the end of a business day.
Required:
a. Summarize the total costs of the Mixing Department and the cost per pound.
b. Summarize the total costs of the Forming Department and the cost per dozen.
c. Summarize the total costs of the Packaging Department and the cost per case.
d. Prepare a summary of total costs incurred to produce the 4,000 cases of Olney Health Bars and the cost for each Health Bar.
e. In which General Ledger account(s) will the cost of the Olney Health Bars appear at the end of the business day?
Mixing
Forming
Packaging
Direct materials
$ 35,000
$0
$3,800
Direct labor
$50,000
$40,000
$14,000
Manufacturing overhead
$45,000
$50,000
$7,000
Output
20,000 lbs.
40,000 dozen
4,000 cases
Explanation / Answer
a. Total costs of the Mixing Department : $ 35,000 + $ 50,000 + $ 45,000 = $ 130,000.
Cost per pound = $ 130,000 / 20,000 lbs. = $ 6.5 per pound.
b. Total costs of the Forming Department = $ 40,000 + $ 50,000 = $ 90,000.
Cost per dozen = $ 90,000 / 40,000 dozen = $ 2.25 per dozen.
c. Total costs of the Packaging Department = $ 3,800 + $ 14,000 + $ 7,000 = $ 24,800.
Cost per case : $ 24,800 / 4,000 cases = $ 6.20 per case.
d.
e. Finished Goods Inventory.
Costs $ Mixing Department 130,000 Forming Department 90,000 Packaging Department 24,800 Total cost of 4,000 cases $ 244,800 Number of Olney Health Bars ( 40,000 x 12) 480,000 Cost per Health Bar $ 0.51Related Questions
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