Wheels Corporation makes two different types of hubcaps for cars––models HM3 and JB4. Circular pieces of metal are stamped out of steel sheets (leaving the edges as scrap), formed, and finished. The stamping operation is identical for both types of hubcaps.
During May, Wheels manufactured 20,000 units of HM3 and 10,000 units of JB4. In May, manufacturing costs per unit of HM3 and JB4 before accounting for the scrap are as follows
Materials-related manufacturing costs are allocated to products at 20% of direct materials costs. Other manufacturing overhead is allocated to products at 200% of direct manufacturing labour costs. Since the same metal sheets are used to make both types of hubcaps, Wheels maintains no records of the scrap generated by the individual products. Scrap generated during manufacturing is accounted for at the time it is returned to the storeroom as an offset to materials-related manufacturing overhead. The value of scrap generated during May and returned to the storeroom was $8,400

  • CreatedJuly 31, 2015
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