Question

1. Enviro Corporation manufactures a special liquid cleaner at its Green plant. Operating data for June follow:

Materials	$	308,000
Labor		38,000
Manufacturing overhead		246,000

The Green plant produced 1,600,000 gallons in June. The plant never has any beginning or ending inventories.

Required:

Compute the cost per gallon of liquid cleaner produced in June. (Round your answer to 2 decimal places.)

2.Graham Petroleum produces oil. On May 1, it had no work-in-process inventory. It started production of 191 million barrels of oil in May and shipped 171 million barrels in the pipeline. The costs of the resources used by Graham in May consist of the following:

Materials	$	2,390	million
Conversion costs (labor and overhead)	$	3,220	million

Required:

The production supervisor estimates that the ending work in process is 80 percent complete on May 31. Compute the cost of oil shipped in the pipeline and the amount in work-in-process ending inventory as of May 31. (Do not round intermediate calculations. Enter your answers in millions. For example, enter "1" instead of "1,000,000".)

3.Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow:

	Basic			Dominator			Total
Units produced		800			300			1,100
Machine-hours		4,100			2,700			6,800
Direct labor-hours		2,100			1,900			4,000
Direct materials costs	$	9,200		$	3,350		$	12,550
Direct labor costs		64,200			39,800			104,000
Manufacturing overhead costs								136,080
Total costs							$	252,630

Required:

Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs. (Round your answer to 2 decimal places.)

Answer 1

1. Computation of Cost per Gallon of Liquid Cleaner
Material	$308,000.00
Labor	$38,000.00
Manufacturign Overhead	$246,000.00
Total Cost	$592,000.00
Quantity of Gallon Produced	1600000
Cost per Gallon ( 592000/1600000)	$0.37

Solution-2
Computation of Equivalent Unit ( in Million Barrel) & Cost per Equivalent unit
	Physical Unit	Material	Conversion Cost
Beginning WIP
Unit Introduced & Completed	171	171	171
Unit in WIP (191-171)	20	20	16
Equivalent Unit (a)	191	191	187
Cost Incurred (b)		$2,390.00	$3,220.00
Cost per Equivalent unit (b/a)		$12.51	$17.22

Cost of Oil Shipped
Material (171X 12.51)	$2,139.21
Conversion Cost ( 171X 17.22)	$2,944.62
Total Cost	$5,083.83

Cost of Ending WIP
Material (20X 12.51)	$250.20
Conversion Cost ( 16X 17.22)	$275.52
Total Cost	$525.72

Solution-3

Predetmined Overhead Rate = Total Manufacturing Overhead Cost/ Total Direct Labour Cost

=136080/104000=130.85%