Hercules Hair Restorer Inc. (HHRI) makes many varieties of hair restoration prod

Question

Hercules Hair Restorer Inc. (HHRI) makes many varieties of hair restoration products which are sold under well-known marketing labels. A single batch contains 10,000 8 oz. bottles and takes two days to make. Typically 15 batches are completed per month, for different brands. Basic cost data for the month of January appears below. Hair by Zeus Bottle Batch Cost per January's other expenses Oil, fl. oz. 2 $3 Supervision $8,000 Lotion, fl. oz. 4 $1 Indirect materials $2,200 Zeus potion, fl. oz. 1/4 $24 Equipment deprec & repairs $14,520 Alcemena scent 1/16 $48 Plant manager's salary $6,500 Bottle, cap, label 1 $0.4 Utilities $1,800 Direct labor, hour 50 $14 $33,020 Machine hours 8 The firm uses actual absorption costing and allocates overhead on the basis of direct labor hours. For batches made in January, which is true? Direct materials costs total $192,200 Direct labor and direct material cost per batch is $192,900 Overheads per direct labor hour amount to $41.09 The full cost of 20 bottles is $385.80 None of the above

Explanation / Answer

ANS (D) THE FULL COST OF 20 BOTTLES IS $385.80.

TOTAL COST PER BATCH = $192,900

ONE BATCH = 10,000 BOTTLES

COST OF ONE BOTTLE = $192,000/10,000BOTTLES = $19.29 PER BOTTLE

TOTAL COST OF 20 BOTTLES = $19.29*20 = $385.80

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