Operation Costing. UB Healthy Company manufactures three different types of vitamins: 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 departments.
Conversion costs are applied based on labor hours in the mixing department. It takes 1.5 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 1 minute of machine time to fill a 200-unit bottle, regardless of the product. UB Healthy is planning to complete one batch of each type of vitamin in July. 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…………………………….$ 8,190
Tableting…………………………...24,150
Encapsulating……………………...25,200
Bottling……………………………..3,510
Required
1. Calculate the conversion cost rates for each department.
2. Calculate the budgeted cost of goods manufactured for vitamin A, vitamin B, and the multivitamin for the month of July.
3. Calculate the cost per 200-unit bottle for each type of vitamin for the month ofJuly.