Question

Organic Grounds produces two brands of coffee: Star and Bucks. The two coffees are produced in one factory using the same production process. The only difference between the two coffees is the cost of the unroasted coffee beans. The following data are available for February Star 5,eee Bucks 20, eee Total 25, eee Number of pounds of coffee produced Cost of unroasted beans and packaging per pound Other costs: Direct labor Indirect materials Other overhead $ 50,000 15,000 100, eee Required: Organic Grounds uses operations costing and assigns conversion costs based on the number of pounds of coffee produced. Compute the cost unit of each brand of coffee produced in February. (Do not round intermediate calculations. Round "Cost per pound" to 2 decimal places.) Star Bucks Total Conversion cost Materials cost Total cost Number of pounds Cost per pound

Answer 1

Answer

	Star	Bucks	Total
Conversion Cost	$33,000	$132,000	$165,000
Material Costs	$20,000	$120,000
Total Cost	$53,000	$252,000
No of pounds	5000	20000
Cost per pound	$10.6000	$12.6000

--Working

	Star	Bucks	Total
Conversion Cost	=+(50000+15000+100000)*5000/25000	=+(50000+15000+100000)*20000/25000	=33000+132000
Material Costs	=5000*4	=20000*6
Total Cost	=33000+20000	=132000+120000
No of pounds	5000	20000
Cost per pound	=53000/5000	=252000/20000