South Dakota Microbrewery

1736 Words Apr 17th, 2013 7 Pages
1. As Exhibit 1 shown, I first calculate the predetermined overhead rate, which is $15.57 per direct labor hour. And I distributed the dollar amount to different proportion based on Direct-Labor hours to get the overhead cost. Sum the overhead and direct cost to get the total cost; this will be the total cost of producing a batch of beer label. Therefore, we need to divide them up by the bottle per batch in order to know the cost per each bottle for each label.
As shown in Exhibit 2, I have determined the allocation rate of each cost driver, and that will allow me to assign them to different cost pool; base on the activities. Adding up all the number I assigned, will give me the overhead cost for each label of a batch. Sum the number
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57 * 18 = $280.26 (Buffalo Ale)
$15.57 * 12 = $186.84 (Bismark Bock)
$15.57 * 13 = $202.41 (Four Heads Stout)
Calculate the Direct Cost
Total DM cost $62.60 and Direct Labor Cost $108.00 for Buffalo Ale
$62.60 + $108.00 = $170.60
Total DM cost $88.95 and Direct Labor Cost $72.00 for Bismark Bock
$88.95 + $72.00 = $160.95
Total DM cost $89.55 and Direct Labor Cost $78.00 for Four Heads Stout
$89.55 + $78.00 = $167.55
Sum the overhead and direct cost to get total cost per batch
Buffalo Ale: $170.60 + $280.26 = $450.86
Bismark Bock: $160.95 + $186.84 = $347.79
Four Heads Stout: $167.55 + $202.41 = $369.96

Exhibit 1
Divide them up by the total bottle per batch to get cost per bottle
$450.86528=$0.85 per bottleBuffalo Ale
$347.79384=$0.91 per bottle Bismark Bock

$369.96432=$0.86per bottleFour Heads Stout

Exhibit 2
An activity-based cost system
Calculate Allocation Rate of each cost driver

$38,0002,910=$13.06 per Fermentation Day
$7,5007,500=$1 per Labor Hour
$5,50082,700=$0.07 per Machine Hour
$10,5004,850=$2.16 per Quality Control Instection
$24,000229,920=$0.10 per Bottle labeled and Storaged
$21,2503,740=$8.36 per Order
Assign the overhead cost by the activity requirements of each label
Fermentation Day Buffalo Ale: $13.06 * 3 = $39.18 Bismark Bock: $13.06 *14 = $182.84
Four Heads Stout: $13.06 * 4 = $52.24
Direct labor hour Buffalo Ale: $1.00 * 18 = $18.00 Bismark Bock: $1.00 * 12 = $12.00 Four Head Stout: $1.00 * 13 =