Determine the two departmental cost driver rates

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Reference no: EM131184260

1. The Gonzalez Company uses a job order costing system at its plant in Green Bay, Wisconsin. The plant has a machining department and a finishing department. The company uses two cost driver rates for allocating manufacturing overhead costs to job orders: one on the basis of machine hours for allocating machining department overhead costs and the other on the basis of direct labour cost for allocating the finishing department overhead costs. Estimates for the current year follow:

	Machining Department	Finishing Department
Manufacturing overhead cost	$750,000	$450,000
Machine hours	25,000	2,000
Direct labour hours	5,000	30,000
Direct labour cost	$250,000	$600,000

a. Determine the two departmental cost driver rates

b. Last month, cost records for job 011 show the following:

	Machining Department	Finishing Department
Direct materials cost	$15,000	$5,000
Machine hours	100	10
Direct labour hours	20	80
Direct labour cost	$1,000	$1,600

Determine the total costs charged to job 011.

2. The information below pertains to October production at Zippy Company's bottling plant, which produces and bottles sports drinks.

	Units	Materials	Conversion
Work in process, October 1	2000	70% complete	60% complete
Started in October	10,000
To account for	12,000
Completed and transferred out	8,000	100% complete	100% complete
Work in process, October 30	4,000	40% complete	25% complete
Accounted for	12,000

Production Costs $8,250 $22,620

a. Determine the number of equivalent units of production for materials and conversion during October.

b. Determine the cost per equivalent unit for materials and conversion and the total cost per equivalent unit.

3. Lindon Company is the exclusive manufacturers of an automotive product that sells for $40 per unit and has a CM ratio of 30%. The company's fixed expenses are $180,000 per year. The company plans to sell 16,000 units this year.

a. What are the variable expenses per unit?

b. What is the breakeven point in units and sales dollars

c. What sales level in units and in sales dollars is required to earn an annual profit of $60,000?

d. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4 per unit. What is the company's new breakeven point in units and sales dollars?

Reference no: EM131184260

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