Question

In: Accounting

Hercules Hair Restorer Inc. (HHRI) makes many varieties of hair restoration products which are sold under...

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


HHRI appoints a new CEO, who decides to increase production targets to 200 batches per year. She also hires a management accountant who decides to apply normal costing and does some research into cost behavior. Basic product data still applies. New information appears below.
  

Estimated overheads for year

% fixed

Supervision

$96,000

100%

Indirect materials

$30,800

60%

Equipment depreciation

$126,240

100%

Equipment repairs

$48,000

30%

Plant manager's salary

$84,500

100%

Utilities

$27,000

20%

$412,540


Require: If HHRI uses a plant-wide rate based on a single cost pool, please calculate full cost for both machine hours and direct labor hours. (10 points)

Hint: When a single cost pool is used, the planned cost per batch is the same whichever cost driver is employed, because ultimately, all overheads have to be charged to production

Solutions

Expert Solution

1)
Bottle Cost per Total Cost
Oil, fl. oz. 2 $             3.00 $             6.00
Lotion, fl. oz. 4 $             1.00 $             4.00
Zeus potion, fl. oz. 0.25 $           24.00 $             6.00
Alcemena scent 0.06 $           48.00 $             3.00
Bottle, cap, label 1 $             0.40 $             0.40
Direct material per bottle $           19.40
Bottles per batch 10000 $ 1,94,000.00
Conversion Cost per Batch
Direct Labour 50 14 $         700.00
Overhead per DLH 50 $           44.03 $      2,201.33
Actual overhead rate = $33020/(50DLH x 15 batch) $           44.03 Per DLH
Full cost per Batch $ 1,96,901.33
Full Cost per Bottle $           19.69
Actual overhead Rate = Estimated overhead/Estimated cost drivers units)
Estimated Cost drivers = Planned batch x Per Batch
Actual overhead per direct labour = $412,540 /200 x 50 $           41.25
Actual overhead per Machine hours = 4412,540/(200*8) $         257.84
PER DLH PER MH
Direct Materials $ 1,94,000.00 $ 1,94,000.00
Direct Labour $         700.00 $         700.00
Overhead per DLH = 50 x 41.25 $      2,062.70
Overhead per MH = 8 x 257.84 $      2,062.70
Total full cost $ 1,96,762.70 $ 1,96,762.70
Full Cost Per Bottle $           19.68 $           19.68

ekkarill92 answered 3 months ago
Next > < Previous

Related Solutions

Hairco makes and sells hair products at an awesome salon. The hair products are made of...
Hairco makes and sells hair products at an awesome salon. The hair products are made of aloe, gel, and tea tree oil. Given the following information about Hairco’s January operations, answer the questions below. Budgeted MOH: $800 per month. Budgeted Machine Hours (Hairco’s chosen allocation base for MOH): 200. Inventory Balances 1/1--------------------- 1/31 Hair Products $ 1000 --------------------1200 Aloe 50 ---------------------------65 Partly-mixed hair products 400 -------------------------385 Gel 300 ---------------------------280 Tea Tree Oil 450 --------------------------620 During January, Hairco bought 200 ounces...
Hairco makes and sells hair products at an awesome salon. The hair products are made of...
Hairco makes and sells hair products at an awesome salon. The hair products are made of aloe, gel, and tea tree oil. Given the following information about Hairco’s January operations, answer the questions below. Budgeted MOH: $800 per month. Budgeted Machine Hours (Hairco’s chosen allocation base for MOH): 200. Inventory Balances 1/1 1/31 Hair Products $ 1000 1200 Aloe 50 65 Partly-mixed hair products 400 385 Gel 300 280 Tea Tree Oil 450 620 During January, Hairco bought 200 ounces...
Lauren Inc. makes three products that can be sold at split-off or processed further and then...
Lauren Inc. makes three products that can be sold at split-off or processed further and then sold. The joint cost for April is $1,512,000. Bottles of Sales Price Separate Cost Final Sales Product Output at Split-Off after Split-Off Price Perfume 28,000 $7.00 $2.50 $16.50 Eau de toilette 44,800 5.00 1.50 13.00 Body splash 39,200 5.00 2.00 12.00 The number of ounces in a bottle of each product is: perfume, one; eau de toilette, two; and body splash, three. Assume that...
Ridgeland Inc. makes backpacks for large sporting goods chains that are sold under the customers' store...
Ridgeland Inc. makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The Accounting Department has identified the following overhead costs and cost drivers for next year: Overhead Item Expected Cost Cost Driver Maximum Quantity Setup Cost 489,600 Number of Setups 7,200 Ordering Cost 130,000 Number of Orders 65,000 Maintenance 920,000 Number of Machine Hours 80,000 Power 88,000 Number of Kilowatt Hours 440,000 Total predicted direct labor hours for next year is 42,500. The...
Ridgeland Inc. makes backpacks for large sporting goods chains that are sold under the customers' store...
Ridgeland Inc. makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The Accounting Department has identified the following overhead costs and cost drivers for next year: Ridgeland Inc. makes backpacks for large sporting goods chains that are sold under the customers' store brand names. The Accounting Department has identified the following overhead costs and cost drivers for next year: Overhead Item Expected Costs Cost Driver Maximum Quantity Setup costs $244,800 Number of setups...
Product Costs using Activity Rates Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are...
Product Costs using Activity Rates Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: ActivityActivity Rate Fabrication$20per machine hour Assembly$10per direct labor hour Setup$50per setup Inspecting$23per inspection Production scheduling$11per production order Purchasing$8per purchase order The activity-base usage quantities and units produced for each product were...
Product Costs using Activity Rates Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are...
Product Costs using Activity Rates Hercules Inc. manufactures elliptical exercise machines and treadmills. The products are produced in its Fabrication and Assembly production departments. In addition to production activities, several other activities are required to produce the two products. These activities and their associated activity rates are as follows: Activity Activity Rate Fabrication $27 per machine hour Assembly $9 per direct labor hour Setup $58 per setup Inspecting $20 per inspection Production scheduling $10 per production order Purchasing $7 per...
Backus, Inc., makes and sells many consumer products. The firm’s average contribution margin ratio is 25%....
Backus, Inc., makes and sells many consumer products. The firm’s average contribution margin ratio is 25%. Management is considering adding a new product that will require an additional $11,000 per month of fixed expenses and will have variable expenses of $5.5 per unit. Required: a. Calculate the selling price that will be required for the new product if it is to have a contribution margin ratio equal to 25%. (Round your answer to 2 decimal places.) b. Calculate the number...
Gluth Company makes three paint products in a single facility. These products are produced and sold...
Gluth Company makes three paint products in a single facility. These products are produced and sold in 5 gallon units. Each has the following unit product costs: Products A B C Direct materials ......................................... $22.50 $22.40 $29.20 Direct labor ................................................ 13.60 11.40 12.50 Variable manufacturing overhead ............. 3.00 3.40 4.50 Total variable unit product cost ................. $39.10 $37.20 $46.20 Additional data concerning these products are listed below. Products A B C Mixing minutes per unit.............................. 3.30 1.70 1.80 Selling price...
GNC Holdings Inc. is a leading retailer of health and nutrition products, which are sold through...
GNC Holdings Inc. is a leading retailer of health and nutrition products, which are sold through both company-operated (3,500 outlets) and franchised retail (3,200 outlets) stores. In addition, GNC manufactures many of the products that it sells through its company-operated and franchised channels. As such, GNC's operating segments are Retail, Franchise and Manufacturing. The Retail segment is made up of company-operated stores, and the Franchise segment is made up of franchised stores. Recent financial information from these segments is as...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT