70.2K

Verified Solution

Link Copied!

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $2 per labor-hour. Strawberry and vanilla flavors are produced in Department SV. Chocolate is produced in Department C. Sven manages Department SV and Charlene manages Department C. The product costs (per thousand gallons) follow

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $2 per labor-hour. Strawberry and vanilla flavors are produced in Department SV. Chocolate is produced in Department C. Sven manages Department SV and Charlene manages Department C. The product costs (per thousand gallons) follow: Strawberry Vanilla Chocolate $ 834 Direct labor (per 1,000 gallons) Raw materials (per 1,000 gallons) $759 809 $1,134 609 509 Required a. If the number of hours of labor per 1,000 gallons is 65 for strawberry, 70 for vanilla, and 120 for chocolate, compute the total cost of 1,000 gallons of each flavor using plantwide allocation Total Cost Strawberry Vanilla Chocolate b. Charlene's department uses older, outdated machines. She believes that her department is being allocated some of the overhead of Department SV, which recently bought state-of-the-art machines. After she requested that overhead costs be broken down by department, the following information was discovered: Department SV $91,044 25,290 25,290 Department C 3,720 36,900 18,600 Machine-hours Labor-hours Using machine-hours as the department allocation base for Department SV and labor-hours as the department allocation base for Department C, compute the allocation rate for each. Round your answers to 2 decimal places.) Allocation Rate Department SV Department C per machine hour per labor hour

Answer & Explanation Solved by verified expert

See Answer