Purex produces three different types of detergents: Breeze, Fresh, and Joy. The company uses four operations to manufacture the detergents: spray drying, mixing, blending, and packaging. Breeze and Fresh are produced in powder form in the mixing department, while Joy is produced in liquid form in the blending department. The powder detergents are packed in 50-ounce paperboard cartons, and the liquid detergent is packed in 50-ounce bottles made of recycled plastic. Purex applies conversion costs based on labor-hours in the spray drying department. It takes 1 ½ minutes to mix the 1 ½ minutes to mix the ingredients for a 50-ounce container for each product. Conversion costs are applied based on the number of containers in the mixing and blending departments and on the basis of machine-hours in the packaging department. It takes 0.3 minutes of machine time to fill a 50-ounce container, regardless of the product.
The budgeted number of containers and expected direct materials cost for each type of detergent are as follows:

The budgeted conversion costs for each department for July are as follows:
Department Budgeted Conversion Cost
Spray Drying ......... $ 8,000
Mixing ........... 22,800
Blending ........... 30,450
Packaging ........... 1,000

1. Calculate the conversion cost rates for each department.
2. Calculate the budgeted cost of goods manufactured for Breeze, Fresh, and Joy for the month of July.
3. Calculate the cost per 50-ounce container for each type of detergent for the month ofJuly.

  • CreatedMay 14, 2014
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