Barbara Karloff Inc Basic Direct Materials Are Applied at the Start of the a Variety

question 15

Multiple Choice

Barbara Karloff Inc.recently set up as a microbrewery to manufacture a variety of beers,ales and stouts to customer specifications.The standard sizes per batch are as follows: stout,5,000 gallons;ale,8,000 gallons;and beer,10,000 gallons.A beer batch takes six days to process,ale ten days and stout 14 days,the difference primarily attributable to the number of steps in the brewing process and the amount of time needed to mature the brew to the intended flavor specifications.By tradition,a new batch is started at 7 a.m. ,the start of a work day.It costs $1,800 in labor and variable overhead to set up each batch.The brewery's monthly fixed overhead is $220,000,which is allocated to products based on gallons.Other costing data appears below. $$\begin{array} { l l l c } \text { Per prillan af autput } & \text { Beer} & \text { Ale } & \text { Stout } \\\text { Basic direct materials } & \$ 0.40 & \$ 0.60 & \$ 0.90 \\\text { Variable conversion costs } & \$ 0.80 & \$ 1.00 & \$ 1.20 \\& \text { Batte } & \text { Labe } & \text { CaseCratePack } \\\text { Othe direct materials } & \$ 0.05 & \$ 0.03 & \$ 0.25\end{array}$$ Basic direct materials are applied at the start of the process.Direct materials costs are charged when used in production and variable conversion costs are applied evenly throughout the production process.There are 128 fluid ounces in a gallon and all products are sold in 12-ounce bottles.Beer is sold with 24 bottles per case,but ale is packed by the dozen in mini-crates,and stout in 6-packs.
In April,the first month of operations,BKI finished five batches of beer,three of ale and one of stout.Dribbles of liquids from one batch that do not completely fill a bottle are poured away.Bottles from a batch that do not make up a complete case,crate or pack are donated to the company monthly picnic.In reviewing the production records,you find that a batch of stout was started on the 23^rd,a batch of ale on the 27^th,and a batch of beer on the 29^th.These batches constitute ending work in process (EWIP) .
With respect to direct materials,which is true for the first month of operations? (Do not round your intermediate calculations. )

• A)A total of 102,000 gallons was completed
• B)A total of 16 bottles was donated to the picnic
• C)Fifty-eight bottles were donated to the picnic
• D)Basic direct materials cost $38,900
• E)None of the choices are correct

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Definitions:

Tests of ρ and β

Statistical tests used to evaluate the significance of the correlation coefficient (ρ) and regression coefficients (β) in describing the relationships between variables.

Sales

Transactions involving the exchange of goods or services for money or other compensation.

Experience

The knowledge or skill acquired by a person over time through involvement in or exposure to events.

Linear Relationship

A type of correlation where changes in one variable are directly proportional to changes in another variable.