Answer:
Results are below.
Explanation:
A) Predetermined overhead rate= $2 per direct labor hour
The product costs (per 1,000 gallons) follow:
Strawberry Vanilla Chocolate
Direct labor $755 $830 $1,130
Raw materials $805 $505 $605
Direct labor hours:
56 for strawberry
66 for vanilla
100 for chocolate
<u>We can calculate the total cost for 1,000 gallons for each flavor:</u>
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Strawberry:
Total cost= 755 + 805 + 56*2
Total cost= $1,672
Vanilla:
Total cost= 830 + 505 + 66*2
Total cost= $1,467
Chocolate:
Total cost= 1,130 + 605 + 100*2
Total cost= $1,935
<u>b) To calculate the activities rates, we need to use the following formula:</u>
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Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base
<u>Department SV:</u>
Activity rate= 75,570 / 25,250= $3 per machine hour
<u>Department C:</u>
Activity rate= 14,274 / 18,300= $0.78 per direct labor hour