Question

Activity Indirect Cost Allocation Base Allocation base by Ale Allocation base by nonAle Allocation base by total

Brewing $5000 Direct Labor 65hours 25 hours 90 hours

Bottling $11000 Machine hours 80hours 30 hours 110 hours

Inspecting $4000 Bottles 8000 bottles 2000 bottles 10000bottles

Other pertinent information: 1.Cost for ingredients and bottles for Ale is $0.35 per bottle 2.Cost for ingredients and bottles for NonAle is $0.25 per bottle. 3. The labor costs to make a bottle of beer is the same for each type of beer,$0.15.

Question: Determine the product cost for 1 bottle of Ale and 1 bottle of NonAle.

Answer 1

Activity	Indirect cost	Allocate base	Ale allocation	Non Ale Allocation	Total
Brewing cost	5000	Labor hr	65	25	90
Bottling cost	11000	Machine Hr	80	30	110
Inspecting cost	4000	No of bottle	8000	2000	10000
Labor cost to make one bottle of beer			0.15	0.15
Cost of ingredient and bottle			0.35	0.25
Product cost per bottle	Ale allocation	Non Ale Allocation	Total
Brewing cost	3611.111111	1388.888889	5000
	5000/90*65	5000/90*25
Bottling cost	8000	3000	11000
	11000/110*80	11000/110*30
Inspecting cost	3200	800	4000
	4000/10000*8000	4000/10000*2000
Total bottle	8000	2000	10000
Total Brewing + Bottling+Inspecting cost	14811.11111	5188.888889
Cost per bottle	1.851388889	2.594444444
Labor cost to make one bottle of beer	0.15	0.15
Cost of ingredient and bottle	0.35	0.25
Product cost	2.351388889	2.994444444
Round	2.35	2.99

I hope this satisfies the answer.

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