CUPORAMA Corp. manufactures cups. The company’s manufacturing operations and costs applied to products for April were:
$\begin{array}{|c|c|c|c|}
\hline & \text { Moulding } & \text { Heat-treat } & \text { Finishing } \
\hline \text { Direct labour } & \$ 25,000 & \$ 12,500 & \$ 7,500 \
\hline \text { actory overhead } & 30,000 & 17,500 & 12,600 \
\hline \text { otal } & \$ 55,000 & \$ 30,000 & \$ 20,10 \
\hline
\end{array}$ Three types of cups were produced in April.The quantities and direct materials costs were:
$\begin{array}{lcc}
\text { Type } & \text { Quantity } & \text { Direct Materials } \
\hline \text { Casts } & 5,000 & \$ 15,000 \
\text { Cups } & 7,000 & 22,470 \
\text { Mugs } & 8,000 & 32,500
\end{array}$ Casts are produced in the Moulding Department.Cups pass through the Moulding and Finishing departments.Mugs pass through all three departments.An operations costing system is used.
-Refer to the figure.What is CUPORAMA's total cost for casts in April?

Question

Quizplus · Accepted Answer

The total cost for casts in April includes the direct materials cost and the costs from the Moulding department. Direct materials cost for casts is $15,000. The Moulding department costs include direct labor ($25,000) and factory overhead ($30,000), totaling $55,000. Since casts are only produced in the Moulding department, we allocate the Moulding department's costs based on the proportion of casts produced relative to the total production.Total units produced = 5,000 (Casts) + 7,000 (Cups) + 8,000 (Mugs) = 20,000 units.The proportion of casts = 5,000 / 20,000 = 1/4.Therefore, the Moulding department's costs allocated to casts = 1/4 of $55,000 = $13,750.Total cost for casts = Direct materials + Allocated Moulding costs = $15,000 + $13,750 = $28,750.

CUPORAMA Corp Three Types of Cups Were Produced in April