Best Brew Corporation manufactures two brands of wine: Regular and Extra Rich
Below is the current year production data for the company:
The 335,000 pounds of material had a total cost of $753,750. Direct labor is $21 per hour.
The company has total overhead production costs of $2,212,125.
a. If Best Brew Corporation applies factory overhead using direct labor hours, compute the total production cost and the unit cost for each brand
b. If Best Brew Corporation applies factory overhead using machine hours, compute the total production cost and the unit cost for each brand.
c. Assume that Best Brew Corporation has established the following activity centers, cost drivers, and costs to apply factory overhead.
Compute the total cost and the unit cost for each brand.
d. Explain why the unit cost for each model is different across the three methods of overhead application. How can this information benefit the organization?

Question

Best Brew Corporation manufactures two brands of wine: Regular and Extra Rich
Below is the current year production data for the company:
  The 335,000 pounds of material had a total cost of $753,750. Direct labor is $21 per hour.
The company has total overhead production costs of $2,212,125.
a. If Best Brew Corporation applies factory overhead using direct labor hours, compute the total production cost and the unit cost for each brand
b. If Best Brew Corporation applies factory overhead using machine hours, compute the total production cost and the unit cost for each brand.
c. Assume that Best Brew Corporation has established the following activity centers, cost drivers, and costs to apply factory overhead.
  Compute the total cost and the unit cost for each brand.
d. Explain why the unit cost for each model is different across the three methods of overhead application. How can this information benefit the organization?

Quizplus · Accepted Answer

The Answer of Best Brew Corporation manufactures two brands of wine: Regular and Extra Rich
Below is the current year production data for the company:
  The 335,000 pounds of material had a total cost of $753,750. Direct labor is $21 per hour.
The company has total overhead production costs of $2,212,125.
a. If Best Brew Corporation applies factory overhead using direct labor hours, compute the total production cost and the unit cost for each brand
b. If Best Brew Corporation applies factory overhead using machine hours, compute the total production cost and the unit cost for each brand.
c. Assume that Best Brew Corporation has established the following activity centers, cost drivers, and costs to apply factory overhead.
  Compute the total cost and the unit cost for each brand.
d. Explain why the unit cost for each model is different across the three methods of overhead application. How can this information benefit the organization?

Best Brew Corporation Manufactures Two Brands of Wine: Regular and Extra