Problem:
The Juicy Lemonade Company manufactures premium flavored organic lemonade. Management is ready to close the books for the end of the first quarter in 2018 and your supervisor has presented you with the following information.
a. Total sales in gallons of flavored lemonade for January 2018 through March 2018 are as follows:
January 14,000
February 15,000
March 17,000
Each gallon of lemonade is packaged in eight 16 ounce bottles and sold in a case that sells for $15.00 per case. The company produced 47,500 units during the first quarter of 2018.
b. The company's Variable Costs include the following
Direct Materials of $1.50 per gallon
Direct Labor of $ per gallon
(Each gallon of lemonade requires 15 minutes of direct labor time and the wage rate is $8.00 per hour)
Variable MOH $ per gallon (The variable overhead rate is $2.00 per machine hour and processing one gallon of lemonade takes 45 minutes of machine time)
Variable Selling and Administrative costs of $1.50 per gallon
c. The company's Fixed Costs for the quarter include the following:
Manufacturing Overhead $47,500
Selling and Administrative $28,900
The company's fixed manufacturing overhead per gallon is $. (The Fixed Manufacturing Overhead rate is based on Fixed Costs for the quarter and the units produced for the quarter.)