Sunrise Vitamin Company manufactures three different types of vita-mins: vitamin A, vitamin B, and a multivitamin. The
Question:
Sunrise Vitamin Company manufactures three different types of vita-mins: vitamin A, vitamin B, and a multivitamin. The company uses four operations to manufacture the vitamins: mixing, tableting, encapsulating, and bottling. Vitamins A and B are produced in tablet form ( in the tableting department) and the multivitamin is produced in capsule form ( in the encapsulating department). Each bottle contains 200 vitamins, regardless of the product. Conversion costs are applied based on the number of bottles in the tableting and encapsulating depart-ments. Conversion costs are applied based on labor- hours in the mixing department. It takes 1 ½ minutes to mix the ingredients for a 200- unit bottle for each product. Conversion costs are applied based on machine-hours in the bottling department. It takes 0.3 minutes of machine time to fill a 200- unit bottle, regardless of the product. The budgeted number of bottles and expected direct material cost for each type of vitamin is as follows:
The budgeted conversion costs for each department for July are as follows:
Department Budgeted Conversion Cost
Mixing..................... $ 8,000
Tableting .................22,800
Encapsulating .........30,450
Bottling.......................1,000
Step by Step Answer:
Managerial Accounting Decision Making and Motivating Performance
ISBN: 978-0137024872
1st edition
Authors: Srikant M. Datar, Madhav V. Rajan