The Rainbow Company Manufactures Paint in Two Processes: Mixing and Cooking

The Rainbow Company manufactures paint in two processes: Mixing and Cooking. Total costs incurred in the mixing and cooking departments are as follows: $\begin{array}{lll}&\text { Direct Materials }&\text { Direct labor }\\\text { Mixing } & \$ 60,000 & \$ 80,000 \\\text { Cooking } & \$ 25,000 & \$ 50,000\end{array}$ Indirect manufacturing costs were $90,000 for the Mixing department and $180,000 for the Cooking department. Rainbow Company manufactures two products, Superior Paint and Deluxe Paint. Costs are allocated to these products in the following proportions: $\begin{array}{lllll}&\text { Mixing }&&\text { Cooking }\\&DM&DL&DM&DL\\\text { Superior } & \mathbf{4 0} \% & \mathbf{7 0} \% & \mathbf{5 0} \% & \mathbf{4 0} \% \\\text { Deluxe } & \mathbf{6 0} \% & \mathbf{3 0} \% & \mathbf{5 0} \% & \mathbf{6 0} \%\end{array}$ Indirect cost is allocated in proportion to the direct labor costs with each department. The Mixing department cost allocated to Deluxe is:

A) $60,000
B) $36,000
C) $87,000
D) $143,000

Correct Answer:

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