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Organic Grounds produces two brands of coffee: Star and Bucks. The two coffees are produced in one factory using the same pro

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COMPUTE THE COST UNIT OF EACH BRAND

Particular star bucks Total
Coffee produced 9000 pounds 36000 pounds (1.4) ratio
Direct labour (1:4) 81000×1/5=16200 81000×4/5=64800 81000
Indirect material (1:4) 40500×1/5=8100 40500×4/5=32400 40500
Other overhead 13500×1/5=2700 13500×4/5=10800 13500
Total cost 27000 108000 135000
COST PER COFFEE PRODUCED (CONVERSION COST). TOTAL COST/UNITS PRODUCED 27000/9000=$3 108000/36000=$3

CALCULATION COST PER UNIT

Cost star bucks
Conversion cost $3 $3
Material cost $4.6 $7.5
Total cost PER UNIT $7.6 $10.5

CALCULATING TOTAL COST

Cost star Bucks
Conversion cost $27000 $108000
Material cost $41400(9000×4.6) $270000(36000×7.5)
TOTAL COST $68400 $378000

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