Reference no: EM132601491

Saouma Manufacturing Company has two departments, machining and fi nishing. For a given period,the following costs were incurred by the company as a whole: direct material, $400,000; direct labor, $90,000; and indirect production, $40,000. The grand total was $530,000.

The machining department incurred 50% of the direct-material costs, but only 10% of the direct- labor costs. Indirect production costs amounted to $10,000 in the machining department and $30,000 in finishing.

Three products were produced using the following proportions of direct material and direct labor in the two departments.

Product                                   Direct Material                 Direct Labor

Alpha                                    20%                                 50%

Beta                                     40%                                   10%

Gamma                                   40%                              40%

Total for the machining department 100%                          100%

Alpha                                           60%                          10%

Beta                                               30%                          20%

Gamma                                           10%                          70%

Total added by finishing department     100%                         100%

As is commonplace, indirect production costs incurred by each department were allocated to products in proportion to the direct-labor costs of products within the departments.

Question 1. Compute the total costs incurred by the machining department and added by the finishing department.

Question 2. Compute the total costs of each product that would be shown as finished-goods inventory if all the products were transferred to finished stock on completion.