Question

Elizabeth, Inc., a factory that produces two different fragrances, rose and lilac, is considering switching its suppliers, and you are attempting to calculate total Manufacturing Overhead (MOH) to get an accurate picture of the company's budget. Under their traditional costing system, it has the following costs: Rose Fragrance: Glass Bottles, $77800; Fragrance, $28800; Bottler Wages, $75800; and Assembly Line Wages, $26500; and Lilac Fragrance: Glass Bottles, $113900; Fragrance, $33352; Bottler Wages, $84100; and Assembly Line Wages, $33400. The manufacturing overhead for each fragrance will be 86% of their Direct Labor (DL) costs. The company produced 28000 glass bottles of rose fragrance and 43300 glass bottles of lilac fragrance during the period. What is their total allocated MOH for the lilac fragrance?

1) $117500.00 2) $87978.00 3) $126636.72 4) $101050.00"

Answer 1

Final answ:

The total allocated MOH for the lilac fragrance, add the bottler wages and assembly line wages for the lilac fragrance to get the total direct labor cost. Multiply the total direct labor cost by 86% to get the total allocated MOH for the lilac fragrance.

Step-by-step explanation:

To calculate the total allocated MOH for the lilac fragrance, we need to determine the direct labor (DL) costs for the lilac fragrance and then calculate 86% of that amount. The direct labor costs for the lilac fragrance include the bottler wages and assembly line wages. Adding the bottler wages and assembly line wages for the lilac fragrance gives us a total DL cost of $117,500.00. Multiplying this amount by 86% gives us the total allocated MOH for the lilac fragrance, which is $101,050.00. Therefore, option 4) $101,050.00 is the correct answer.