PR 5-4 (LO 5.1) Brew Shack is a small brewery that is trying to... Brew Shack is a small brewery that is trying to better understand its costs. The company, which currently uses traditional job-order costing, allocates overhead costs using a single cost driver. The company is considering using two-stage allocation to assign overhead costs to batches of product. It gathers the following estimates: Budgeted MOH Budgeted machine hours Budgeted direct labor hours Cost Pool Machine-related MOH Labor-related MOH Total Total Cost $ 30,000 $ 18,000 $ 48,000 $ 48,000 20,000 5,000 Allocation base Machine hour Direct labor hour One batch of Pumpkin Moon Ale uses 4 machine hours and 1.5 direct labor hours. Question a. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of machine hours, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note Round your answer to 2 decimals $ $ b. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of direct labor hours, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note: Round your answer to 2 decimals c. Assuming that Brew Shack uses two-stage allocation with the two cost pools indicated above, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note Round your answer to 2 decimals. Answer 9.60 14.40 4

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Author:Gaylord N. Smith
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Chapter20: Activity-based Costing (abc)
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PR 5-4 (LO 5.1) Brew Shack is a small brewery that is trying to...
Brew Shack is a small brewery that is trying to better understand its costs. The company, which currently uses traditional job-order
costing, allocates overhead costs using a single cost driver. The company is considering using two-stage allocation to assign overhead
costs to batches of product. It gathers the following estimates:
Budgeted MOH
Budgeted machine hours
Budgeted direct labor hours
Cost Pool
Machine-related MOH
Labor-related MOH
Total
Total Cost
$ 30,000
*$ 18,000
$ 48,000
$ 48,000
20,000
5,000
Allocation base
Machine hour
Direct labor hour
One batch of Pumpkin Moon Ale uses 4 machine hours and 1.5 direct labor hours.
Question
a. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of machine hours, what amount of
overhead is allocated to a batch of Pumpkin Moon Ale? Note: Round your answer to 2 decimals
$
$
b. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of direct labor hours, what amount
of overhead is allocated to a batch of Pumpkin Moon Ale? Note: Round your answer to 2 decimals.
c. Assuming that Brew Shack uses two-stage allocation with the two cost pools indicated above, what amount of
overhead is allocated to a batch of Pumpkin Moon Ale? Note Round your answer to 2 decimals.
Answer
9.60
14.40
Transcribed Image Text:PR 5-4 (LO 5.1) Brew Shack is a small brewery that is trying to... Brew Shack is a small brewery that is trying to better understand its costs. The company, which currently uses traditional job-order costing, allocates overhead costs using a single cost driver. The company is considering using two-stage allocation to assign overhead costs to batches of product. It gathers the following estimates: Budgeted MOH Budgeted machine hours Budgeted direct labor hours Cost Pool Machine-related MOH Labor-related MOH Total Total Cost $ 30,000 *$ 18,000 $ 48,000 $ 48,000 20,000 5,000 Allocation base Machine hour Direct labor hour One batch of Pumpkin Moon Ale uses 4 machine hours and 1.5 direct labor hours. Question a. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of machine hours, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note: Round your answer to 2 decimals $ $ b. Assuming that Brew Shack allocates manufacturing overhead costs on the basis of direct labor hours, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note: Round your answer to 2 decimals. c. Assuming that Brew Shack uses two-stage allocation with the two cost pools indicated above, what amount of overhead is allocated to a batch of Pumpkin Moon Ale? Note Round your answer to 2 decimals. Answer 9.60 14.40
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