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how did the get the 1200 budgeted quantity of cost driver EgyptianEgyptian Spa produces two different...

how did the get the 1200 budgeted quantity of cost driver

EgyptianEgyptian

Spa produces two different spa products:

RelaxRelax

and

RefreshRefresh.

The company uses three operations to manufacture the detergents: mixing, blending, and packaging.

(Clickthe icon to view the additional information.)The budgeted number of containers and expected direct materials and the budgeted conversion costs for

MayMay

are as follows:

(Clickthe icon for the budget information.)Read therequirements

Requirement 1. Calculate the conversion cost rates for each department.

Determine the formula and then calculate the conversion cost rate for each department. (Round the conversion cost rate to the nearest cent.)

Budgeted conversion cost

Budgeted quantity of cost driver

Conversion cost rate

Mixing

$11,760

1,200

$9.80

Blending

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Because of the materials used,

RelaxRelax

is produced in powder form in the mixing department and then transferred to the blending department and then onto packaging.

RefreshRefresh

is produced in liquid form in the blending department and is then transferred to packaging.

EgyptianEgyptian

Spa applies conversion costs based onlabor-hours in the mixing department. It takes

minutes to mix the ingredients for a container of

RelaxRelax.

Conversion costs are applied based on the number of containers in the blending departments and on the basis of machine-hours in the packaging department. It takes

0.50.5

minutes of machine time to fill acontainer, regardless of the product.

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The budgeted number of containers and expected direct materials cost for each product are as follows:

	Relax		Refresh
Number of containers		24,000		18,000
Direct materials cost		$17,160		$13,140

The budgeted conversion costs for each department for

MayMay

are as follows:

	Allocation of	Budgeted
Department	Conversion Costs	Conversion Cost
Mixing	Direct labor hours	$11,760
Blending	Number of containers	$20,160
Packaging	Machine hours	$2,800

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Expert Solution

Particulars	Mixing	Blending	Packaging
Application of Conversion Cost Based on	Number of Labour Hours	Number of Containers	Number of Machine hours
Convertion Costs	11760	20160	2800
Number of labour Hours/Containers/Machine Hours or COST Driver	1200	42000	350(WN)
Convertion Cost Rate / Cost Driver	9.8	0.48	8

WN- Calculation of Machine Hours
It takes 0.5 Minutes for One Container
a)Total Containers ( 24000+18000)	42000
b)Number of Machine Minutes(+42000*0.5)	21000
c) Number of Machine hours(b/60)	350	Machine Hours

Particulars	Relax	Refresh
Number of Containers	24000	18000



Particulars	Relax	Refresh
Direct Material Cost	17160	13140
Convertion Costs
Mixing(Fully for Relax)	11760	0
Blending(No. of Containers * Conv rate/Cost Driver)	11520	8640
Packaging((0.5 Minutes * Conv Rate/Cost Driver*Number of Containers)/60))	1600	1200

Total Cost	42040	22980


Note-Formatting of the Question was not Good.However I tried my level best to Solve this

ekkarill92 answered 1 year ago

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