Manufacturing Company manufactures Tye Dye Special Garment (SG), using cotton e as direct materials. One SG is budgeted to use 34 parts of cotton at a cost of $2 per d 0.8 gallons of dye at a cost of $7 per gallon. All other materials are indirect. At the ing of the year Cari's has an inventory of 450,000 parts of cotton at a cost of $861,800 100 gallons of dye at a cost of $24,680. Target ending inventory of cotton and dye is ari's uses the FIFO inventory cost flow method. SG are very popular and demand is high, but because of capacity constraints the firm oduce only 200,000 SG per year. The budgeted selling price is $2,100 each. There are in beginning inventory. Target ending inventory of SG is also zero. makes SG by hand, but uses a machine to dye the cotton. Thus, overhead costs are lated in two cost pools one for weaving and the other for dyeing. Weaving overhead ated to products based on direct manufacturing labor-hours (DMLH). Dyeing ad is allocated to products based on machine-hours (MH). s no direct manufacturing labor cost for dyeing. Cari's budgets 60 direct acturing labor hours to weave a SG at a budgeted rate of $14 per hour. It budgets 0.2 e-hours to dye each part in the dyeing process. lowing table presents the budgeted overhead costs for the dyeing and weaving cost le costs rect materials ntenance ities costs Dyeing Weaving (based on 1.400.000 MH) (based on 12.000.000 DMLH) SO 6,560,000 7,550,000 $15,400,000 5,540,000 2,890,000
Cari’s Manufacturing Company manufactures Tye Dye Special Garment (SG), using cotton and dye as direct materials. One SG is budgeted to use 34 parts of cotton at a cost of $2 per part and 0.8 gallons of dye at a cost of $7 per gallon. All other materials are indirect. At the beginning of the year Cari’s has an inventory of 450,000 parts of cotton at a cost of $861,800 and 4,000 gallons of dye at a cost of $24,680. Target ending inventory of cotton and dye is zero. Cari’s uses the FIFO inventory cost flow method. Cari’s SG are very popular and demand is high, but because of capacity constraints the firm will produce only 200,000 SG per year. The budgeted selling price is $2,100 each. There are no SGs in beginning inventory. Target ending inventory of SG is also zero. Cari’s makes SG by hand, but uses a machine to dye the cotton. Thus, overhead costs are accumulated in two cost pools—one for weaving and the other for dyeing. Weaving overhead is allocated to products based on direct manufacturing labor-hours (DMLH). Dyeing overhead is allocated to products based on machine-hours (MH). There is no direct
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
