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Question 5 Crane Corporation produces two grades of non-alcoholic wine from grapes that it buys from California growers. It pYour answer is correct. Under traditional product costing using direct labor hours, compute the total manufacturing cost perPrepare a schedule assigning each activitys overhead cost pool to each product, based on the use of cost drivers. Include a

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Answer #1
Overhead rate = Total overheads/Total labor hours 6.562691667 per hour
Calculation of manufacturing cost:
CoolDay LiteMist
Direct materials per liter 0.4 1.2
Direct labor cost per liter 0.5 0.9
Overhead Cost = Cost per hour*Labor hours per unit 0.459 0.656
Total Manufacturing Cost per litre 1.359 2.756
(b)Schedule showing computation of rates:
Overhead Cost Driver Rate/Activity
Grape processing 146,546 6,600 22.204
Aging 673,200 6,600,000 0.102
Bottling and corking 289,800 900,000 0.322
Labeling and boxing 222,300 900,000 0.247
Maintain and inspect equipment 243,200 800 304
(c)Allocation of cost
Overhead Rate/Activity Activity- CoolDay Cost Assigned Activity-LiteMist Cost Assigned
Grape processing 22.204 6,000 133,224 600 13,322
Aging 0.102 3,000,000 306,000 3,600,000 367,200
Bottling and corking 0.322 600,000 193,200 300,000 96,600
Labeling and boxing 0.247 600,000 148,200 300,000 74,100
Maintain and inspect equipment 304 350 106,400 450 136,800
Total 887,024 688,022
Number of litres 3,000,000 300,000
Cost per litre 0.29567467 2.29341
(d)Total Manufacturing cost:
CoolDay LiteMist
Direct materials per liter 0.4 1.2
Direct labor cost per liter 0.5 0.9
Overhead Cost 0.296 2.293
Total Manufacturing Cost per litre 1.196 4.393
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