Terrel Gifts produces logo platters and cups bearing the name of the city in which the items will be sold to tourists. Indirect logo printing costs are allocated to platters and cups based on the amount of time spent on the logo machine. The company has budgeted logo costs of $4,224 per month and expects to spend 4,800 hours on the printing logos each month. Each platter uses 24 minutes and each cup spends 6 minutes on the logo machine. How much of the logo printing costs will be allocated to each platter?

Question

Quizplus · Accepted Answer

First, calculate the total minutes spent on printing logos per month:

Platters: 24 minutes/platter x number of platters 
Cups: 6 minutes/cup x number of cups

Since we don't have the exact number of platters and cups, we can use the following equations:

24 minutes/platter x P = total minutes on platters 
6 minutes/cup x C = total minutes on cups

We know that the total time spent on logos is 4,800 hours, which is equal to 288,000 minutes:

total minutes on platters + total minutes on cups = 288,000

Solving for P and C, we get:

P = (288,000 - 6C)/24 
P = 12,000 - 0.25C

Next, we can use the cost allocation formula:

Indirect cost per unit = (Indirect costs / Total units of allocation base) x Units of allocation base per unit

In this case, the allocation base is time spent on the logo machine (minutes).

For platters:

Indirect cost per unit = ($4,224 / 288,000 minutes) x 24 minutes/platter 
Indirect cost per unit = $0.35/platter

Therefore, the answer is B, $0.88, is incorrect.

Terrel Gifts Produces Logo Platters and Cups Bearing the Name