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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.

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​(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:

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​(Clickthe icon for the budget​ information.)Read therequirements

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.

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

/

=

Enter any number in the edit fields and then click Check Answer.

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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 on​labor-hours in the mixing department. It takes

33

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 a​container, 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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Solutions

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 2 years ago
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