Question

Egyptian Spa produces two different spa products: Relax and Refresh. The company uses three operations to manufacture the products: mixing, blending, and packaging. Because of the materials used, Relax is produced in powder form in the mixing department, then transferred to the blending department, and finally on to packaging. Refresh undergoes no mixing; it is produced in liquid form in the blending department and then transferred to packaging. Egyptian Spa applies conversion costs based on labor-hours in the mixing department. It takes 2 minutes to mix the ingredients for a container of Relax. 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 .5 minutes of machine time to fill a container, regardless of the product. The budgeted number of containers and expected direct materials cost for each product are as follows:

Relax Number of Containers 24,000 Refresh Number of Containers 18,000

Direct materials cost Relax- $17,160.00 Refresh- $13,140.00

The budgeted conversion costs for each department for May are as follows:

Department	Allocation of conversion costs	budgeted conversion cost
Mixing	Direct labor-costs	11,760.00
Blending	Number of Containers	20160
Packaging	Machine-hours	2800

Blending Number of containers 20,160

Packaging Machine-hours 2800

Requirement 1: Calculate the conversion cost rates for each department

Requirement 2: Calculate the cost of goods manufactured for Relax and Refresh for the month of May

Requirement 3: Calculate the cost per container for each product for the month of May

Please show work and calculations

Answer 1

ans 1					RelAX		Refresh
Depatment	Conversion cost C		Activity driver A	Conversion cost rate F=C/A	Activity driver D	Cost allocated D*F	Activity driver G	Cost alloacted G*F
Mixing	$11,760	direct labor hours	1400	$8.40	800	$6,720	600	$5,040
			(24000*2/60)+(18000*2/60)		(24000*2/60)		(18000*2/60)
Blending	$20,160	no. of containers	42000	$0.48	24000	$11,520	18000	$8,640
			(24000+18000)
Packaging	2800	no. of machine hours	350	8	200	$1,600	150	$1,200
			(24000*.5/60)+(18000*.5/60)		(24000*.5/60)		(18000*.5/60)
					Total	$19,840		$14,880
Ans 2
Cost of Good Manufactured
		Relax	Refresh
Direct Material		$17,160	$13,140
Conversion cost		$19,840	$14,880
Cost of Good Manufactured		$37,000	$28,020
ans 3
Cost per container
Cost of Good Manufactured		$37,000	$28,020
No. of containers		24000	18000
Cost per container		$1.54	$1.56