PR 5-4 (LO 5.1) Brew Shack is a small brewery that is trying to... Brew Shack is a small brewery that is trying to better understand its costs. The company, which currently uses traditional job-order costing, allocates overhead costs using a single cost driver. The company is considering using two-stage allocation to assign overhead costs to batches of product. It gathers the following estimates: Budgeted MOH Budgeted machine hours Budgeted direct labor hours Cost Pool Machine-related MOH Labor-related MOH Total Total Cost $ 30,000 $ 18,000 $ 48,000 $ 48,000 20,000 5,000 Allocation base Machine hour Direct labor hour One batch of Pumpkin Moon Ale uses 4 machine hours and 1.5 direct labor hours. Question a. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of machine hours, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note Round your answer to 2 decimals $ $ b. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of direct labor hours, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note: Round your answer to 2 decimals c. Assuming that Brew Shack uses two-stage allocation with the two cost pools indicated above, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note Round your answer to 2 decimals. Answer 9.60 14.40 4
PR 5-4 (LO 5.1) Brew Shack is a small brewery that is trying to... Brew Shack is a small brewery that is trying to better understand its costs. The company, which currently uses traditional job-order costing, allocates overhead costs using a single cost driver. The company is considering using two-stage allocation to assign overhead costs to batches of product. It gathers the following estimates: Budgeted MOH Budgeted machine hours Budgeted direct labor hours Cost Pool Machine-related MOH Labor-related MOH Total Total Cost $ 30,000 $ 18,000 $ 48,000 $ 48,000 20,000 5,000 Allocation base Machine hour Direct labor hour One batch of Pumpkin Moon Ale uses 4 machine hours and 1.5 direct labor hours. Question a. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of machine hours, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note Round your answer to 2 decimals $ $ b. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of direct labor hours, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note: Round your answer to 2 decimals c. Assuming that Brew Shack uses two-stage allocation with the two cost pools indicated above, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note Round your answer to 2 decimals. Answer 9.60 14.40 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:PR 5-4 (LO 5.1) Brew Shack is a small brewery that is trying to...
Brew Shack is a small brewery that is trying to better understand its costs. The company, which currently uses traditional job-order
costing, allocates overhead costs using a single cost driver. The company is considering using two-stage allocation to assign overhead
costs to batches of product. It gathers the following estimates:
Budgeted MOH
Budgeted machine hours
Budgeted direct labor hours
Cost Pool
Machine-related MOH
Labor-related MOH
Total
Total Cost
$ 30,000
*$ 18,000
$ 48,000
$ 48,000
20,000
5,000
Allocation base
Machine hour
Direct labor hour
One batch of Pumpkin Moon Ale uses 4 machine hours and 1.5 direct labor hours.
Question
a. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of machine hours, what amount of
overhead is allocated to a batch of Pumpkin Moon Ale? Note: Round your answer to 2 decimals
$
$
b. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of direct labor hours, what amount
of overhead is allocated to a batch of Pumpkin Moon Ale? Note: Round your answer to 2 decimals.
c. Assuming that Brew Shack uses two-stage allocation with the two cost pools indicated above, what amount of
overhead is allocated to a batch of Pumpkin Moon Ale? Note Round your answer to 2 decimals.
Answer
9.60
14.40
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