Question

Licorice Corp. manufactures cricket bats. The s manufacturing operations and costs applied to products for the month of Direct labor Factory overhead Total Grading Machining Shaping s 4,000 11.000 $15.000 s 5,000 6,000 12,00010.000 $17.000 $16.000 Two types of bats were produced in December. The quantities and direct materials costs were Quantity Direct materials Ordinary Premium 20,000 12.000 $15.000 $30.000 Both types of bats pass through all the three departments. An operation costing syatem is used. Compute the total cost of premium bats produced in the manth of Decembe a. $48.000 O b. $40.000 $32/000 $30:000 5

Answer 1

Solution

Licorice Corp

The correct answer is $48,000

Computations –

Computation of total cost of premium bats produced in the month of December:

Total cost = direct materials + direct labor + factory overhead

Since both types of bats pass through all the three departments the direct labor and factory overhead cost is determined as follows,

Total direct labor and factory overhead cost of all the three departments = $15,000 + $17,000 + $16,000 = $48,000

Total number of bats produced = total premium bats + total ordinary bats

            = 32,000

Total direct labor and factory overhead cost per bat of all the three departments = $48,000/32,000 = $1.50 per bat

Total cost of premium bats –

Direct materials                                               $30,000

Direct labor and factory overhead cost          $18,000           (12,000 x $1.50)

Total cost                                                        $48,000