NAME: ACC 203 FS18 EXAM CHAPTERS 14-17 DUE MONDAY 7/2/18 at 12:30 6. (15 Points)
ID: 2395594 • Letter: N
Question
NAME: ACC 203 FS18 EXAM CHAPTERS 14-17 DUE MONDAY 7/2/18 at 12:30 6. (15 Points) Assume New Belgium Brewing Company manufactures and distributes three types of beer and that estimated per unit product costs and related information for the next year are shown in the following table: Blue Paddle Somersault Mole Ale Cocoa Cost data per unit Direct materials Direct labor Overhead Total product cost per unit $100,000 $00,000 $750,000 3,600$4800 $12,000 $16,000 $20,000 $6,000 Machine hours per unit Number of units produced per year 30 MH 40 MH 30 units 20 units 50 MH | 10units a. If New Belgium Brewing Company uses a plantwide overhead rate based on machine hours, what is the total product cost per unit of Cocoa Mole Ale? b. Blue Paddle is a traditional brew made in large quantities with long production runs. Somersault is a seasonal beer made in small batches. Cocoa Mole Ale is a specialty beer also made in small batches. Which of the overhead allocation methods studied in this chapter would you recommend that New Belgium Brewing Company use and why?Explanation / Answer
Answer 1(a):
Calculation of overhead rate (Blanket overhead rate which is Pre-determined overhead rate):
A. Total overheads = $12,000 + $16,000 + $20,000 = $48,000
B. Total number of machine = 30+40+50 = 120 hours
C. Machine overhead rate = A/C = $400 per machine hour
Calulation of product cost per unit of Cocoa Mole Alc:
Direct material per unit = $750,000
Direct labour per unit = $6,000
Overhead allocation (50* X 400) = $20,000
Total cost per unit = $776,000
*Note : Number of machine hours = 50 hours
Answer 1(b):
I would recommend Blanket overhead rate/ single overhead rate if following conditions are satisfied:
1. All products pass through all departments and
2. All products are processed for the same length of time in each department.
if any of the above conditions are not satisifed, i would recommend departmental overhead rate.
Hope this is useful and thank you!!!!!!
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