Henry Mulenga has three production departments; Preparation Assembly and Finishing They also have two service departments;...

 

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Henry Mulenga has three production departments; Preparation Assembly and Finishing They also have two service departments; Maintenance and Material handling The budgeted information for the year 2018 is as follows; a. Department Overhead Cost Allocated/apportioned Сарacity Utilization ZMW Preparation 180,000.00 96,000.00 40 machine hours Assembly Finishing 120 labour hours 84,000.00 120 labour hours Maintenance 12,000.00 Material handling 8,000.00 b. The service department costs should be re-apportioned to the production departments as follows; Preparation Assembly Finishing Maintenance 60% 10% 30% Material Handling 40% 30% 30% c. The preparation department's machines are supervised by a machine minder whose wage is an overhead cost. In the assembly and finishing departments, the wage rate is K2,200.00 per hour d. Administration and selling overheads are to be absorbed in Job costs at 20% of production cost. Distribution overhead should be added to each job according to quotes from outside carriage companies, Henry Mulenga wishes to quote for job 35 using a total absorption cost method to establish the selling price. The following information is also available for Job 35: i. Direct material cost - K410,000.00 Time required - ii. Preparation 3 machine hours Assembly 4 labour hours 5 labour hours Finishing Special design drawings i. K166,000.00 iv. Distribution quote from haulage company K150,000.00 Required: a. Explain the circumstances under which you use job costing b. Calculate the total cost for Job 35 What is the expected selling price for Job 35 if the profit margin is 25% C. Henry Mulenga has three production departments; Preparation Assembly and Finishing They also have two service departments; Maintenance and Material handling The budgeted information for the year 2018 is as follows; a. Department Overhead Cost Allocated/apportioned Сарacity Utilization ZMW Preparation 180,000.00 96,000.00 40 machine hours Assembly Finishing 120 labour hours 84,000.00 120 labour hours Maintenance 12,000.00 Material handling 8,000.00 b. The service department costs should be re-apportioned to the production departments as follows; Preparation Assembly Finishing Maintenance 60% 10% 30% Material Handling 40% 30% 30% c. The preparation department's machines are supervised by a machine minder whose wage is an overhead cost. In the assembly and finishing departments, the wage rate is K2,200.00 per hour d. Administration and selling overheads are to be absorbed in Job costs at 20% of production cost. Distribution overhead should be added to each job according to quotes from outside carriage companies, Henry Mulenga wishes to quote for job 35 using a total absorption cost method to establish the selling price. The following information is also available for Job 35: i. Direct material cost - K410,000.00 Time required - ii. Preparation 3 machine hours Assembly 4 labour hours 5 labour hours Finishing Special design drawings i. K166,000.00 iv. Distribution quote from haulage company K150,000.00 Required: a. Explain the circumstances under which you use job costing b. Calculate the total cost for Job 35 What is the expected selling price for Job 35 if the profit margin is 25% C.