Hercules Hair Restorer Inc. (HHRI) makes many varieties of hair restoration products which are sold under well-known marketing labels. A single batch contains 10,000 8 oz. bottles and takes two days to make. Typically 15 batches are completed per month, for different brands. Basic cost data for the month of January appears below.

HHRI appoints a new CEO, who decides to increase production targets to 200 batches per year. She also hires a management accountant who decides to apply normal costing and does some research into cost behavior. Basic product data still applies. New information appears below.

If HHRI uses a plant-wide rate based on a single cost pool, which of the following statements is true?

A. The overhead rate is $35.564 per hour

B. If machine hours are used as the cost driver, the overhead rate is $41.254 per hour

C. If machine hours are used as the cost driver, the full cost per bottle is $19.762

D. If direct labor hours are used as the cost driver, the full cost per batch $192,762.70

E. (c) and (d) only

Transcribed Image Text:

Hair by Zeus Oil, fl. Cost Bottle Batch per January' s other expenses $3 Supervision $8,000 Indirect $1 materials Equipment deprec & $24 repairs Plant manager's $48 salary oz. 2 Lotion, fl. 4 $2,200| oz. Zeus potion, fl. 1/4 $14,520 oz. Alcemena 1/16 $6,500 scent Bottle, сар, label Direct labor, hour Machine hours 1 S0.4 Utilities $1,800 50 $14 $33,020 8 Hair by Zeus Oil, fl. Cost Bottle Batch per January' s other expenses $3 Supervision $8,000 Indirect $1 materials Equipment deprec & $24 repairs Plant manager's $48 salary oz. 2 Lotion, fl. 4 $2,200| oz. Zeus potion, fl. 1/4 $14,520 oz. Alcemena 1/16 $6,500 scent Bottle, сар, label Direct labor, hour Machine hours 1 S0.4 Utilities $1,800 50 $14 $33,020 8

Answer rating: 100% (QA)

Asnwer Full cost per batch is 19676270 Calculation Below Total Fixed Variable Supervision ... View the full answer