Question

Compute the cost of 1,000 gallons of each flavor of ice cream using the department allocation rates computed in requirement (b) if the number of machine-hours for 1,000 gallons of each of the three flavors of ice cream are as follows:

Strawberry Vanilla Chocolate
Direct labor (per 1,000 gallons) $766 $841 $1,141
Raw materials (per 1,000 gallons) 816 516 616

Required:
If the number of hours of labor per 1,000 gallons is 60 for strawberry, 70 for vanilla, and 100 for chocolate, compute the total cost of 1,000 gallons of each flavor using plantwide allocation.

Answer 1

As you did not include the departmental allocation rate calculated or the question relating to it, I shall provide an allocation rate and you can relate this with your assignment.

Assume the allocation rate is $3.00

Labor, raw materials and overhead cost allocation hours are given in terms of 1,000 gallons already.

Cost of Strawberry:

= Direct labor + Raw materials + Overhead cost

= 766 + 816 + (60 hours * $3.00 allocation)

= 766 + 816 + 180

= $‭1,762‬

Cost of Vanilla:

= 841 + 516 + (70 * 3)

= 841 + 516 + 210

= $1,567

Cost of Chocolate:

= 1,141 + 616 + (100 * 3)

= 1,141 + 616 + 300

= $2,057