2. 10.00 points Main Street Ice Cream Company uses a plantwide allocation method

Question

2. 10.00 points Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $2 per labor-hour. Strawberry and vanilla flavors are produced in Department SV. Chocolate is produced in Department C. Sven manages Department SV and Charlene manages Department C. The product costs (per thousand gallons) follow: Direct labor (per 1,000 gallons) Raw materials (per 1,000 gallons) 755 $830 $1,130 805 605 Required ( f the number of hours of labor per 1,000 gallons is 56 for strawberry, 66 for vanilla, and 100 for chocolate, compute the total cost of 1,000 gallons of each flavor using plantwide allocation. Vanila Chocolate b)Charlene's department uses older, outdated machines. She believes that her department is being allocated some of the overhead of Department SV, which recently bought state-of- the-art machines. After she requested that overhead costs be broken down by department, the following information was discovered: $14 274 36 500 18.300 $75.750 Using machine-hours as the department allocation base for Department SV and labor-hours as the department allocation base for Department C, compute the allocation rate for each. (Round your answers to 2 decimal places.) Department SV per machine hour per labor hour

Explanation / Answer

a) Cost of 1000 gallons

b)

Strawberry Vanilla Chocolate Material Cost 805 505 605 Direct labour 755 830 1130 Labour Hours 56 66 100 Overheads @ 2 per labour hour 112 132 200 Total Cost 1672 1467 1935

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