Your company produces sandwich cookie snack packs. There are three main processes used to make the cookies.  The first process preps and mixes the ingredients into the cookie and the filling.  The second process shapes, forms and bakes the cookies.  The third process packages the cookies.  The cookies are sold in cases of 30 cookie packs (1 case is a unit) Information on the direct materials is listed in table 1. Consider this information the standard.    Direct labor information given in Table 2.  Consider this information the standard.  Annual overhead information is given in Table 3. Overhead is allocated based direct labor hours.  Estimated annual direct labor hours are 221,800.  Calculate a predetermined OH rate (round to two decimal places if needed).  Use this rate when you need to apply OH. Table 4 gives you the information for the last six months on the manufacturing overhead cost and machine hours.  Using the high/low method of cost estimation and this information, determine the fixed and variable portions of the manufacturing overhead cost.  (You will need this information to complete Table 5). Machine hours have been determined as the best cost driver for manufacturing OH. It takes one machine hour to make 200 cases of cookies. Table 5 is where you will list all your production cost (DM, DL, MOH), separated into their fixed and variable components. Note this table wants variable cost per unit and annual fixed cost.   Table 1: Direct Materials Material Quantity per unit Cost Total per unit Cookie Ingredients 240 grams $0.0065 $1.56

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Your company produces sandwich cookie snack packs. There are three main processes used to make the cookies.  The first process preps and mixes the ingredients into the cookie and the filling.  The second process shapes, forms and bakes the cookies.  The third process packages the cookies.  The cookies are sold in cases of 30 cookie packs (1 case is a unit)

Information on the direct materials is listed in table 1. Consider this information the standard.    Direct labor information given in Table 2.  Consider this information the standard. 

Annual overhead information is given in Table 3. Overhead is allocated based direct labor hours.  Estimated annual direct labor hours are 221,800.  Calculate a predetermined OH rate (round to two decimal places if needed).  Use this rate when you need to apply OH.

Table 4 gives you the information for the last six months on the manufacturing overhead cost and machine hours.  Using the high/low method of cost estimation and this information, determine the fixed and variable portions of the manufacturing overhead cost.  (You will need this information to complete Table 5). Machine hours have been determined as the best cost driver for manufacturing OH. It takes one machine hour to make 200 cases of cookies.

Table 5 is where you will list all your production cost (DM, DL, MOH), separated into their fixed and variable components. Note this table wants variable cost per unit and annual fixed cost.

 

Table 1: Direct Materials

Material

Quantity per unit

Cost

Total per unit

Cookie Ingredients

240 grams

$0.0065

$1.56

Filling

      90 grams

0.0080

0.72

Packaging 1

1 box

0.2000

0.20

Packaging 2

30 wrappers 

0.0250

0.75

Total cost

 

 

$3.23

 

Table 2:   Direct Labor

Job description

Hours per unit

Rate

Total cost

Processor

0.30

 $18.00

$5.40

Baker

0.04

 18.00

0.72

Packager

0.02

 18.00

0.36

 

 

 

 

Total cost

 

 

$6.48

 

Table 3:  YEARLY OVERHEAD COSTS

        

Cost description

Amount

Indirect material

$14,400

Indirect labor

72,000

Machine Maintenance

19,200

Electricity

6,380

Depreciation

21,600

Quality testing

54,950

Total

$188,530

 

Table 4 – Actual Overhead cost for the last six months

 

Machine hours

OH Cost

Month 1

320

$16,600

Month 2

200

$14,500

Month 3

420

$18,460

Month 4

500

$19,900

Month 5

220

$14,860

Month 6

           210

$14,680

 

 

 

 

*200 cases produced per machine hour

    

 Complete any calculations here:

 

Table 5:  Variable and Fixed Costs

 

COSTS Description                  VARIABLE Cost per unit                FIXED Cost per Year           

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

             TOTAL

 

 

If a cost is mixed, put the fixed amount in the fixed column and the variable amount in the variable column.

 

CVP Calculations:

 

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