The figure below is a summary of RST's business plan to produce three products X, Y,...

Transcribed Image Text:

The figure below is a summary of RST's business plan to produce three products X, Y, and Z in three product cost centers next year. Production Direct labor requirements: Direct material cost Cutting department: Skilled operatives Unskilled operatives Machining department Pressing department Machine requirements: Machining department X 4,000 units Y 2,000 units Z 6,000 units $7 per unit $4 per unit $9 per unit 3 hr/unit 6 hr/unit 5 hr/unit 2 hr/unit 1 hr/unit 1/2 hr/unit 1/4 hr/unit 3 hr/unit 1/3 hr/unit 2 hr/unit 3 hr/unit 4 hr/unit 2 hr/unit 1.5 hr/unit 2.5 hr/unit The business operates a full absorption costing system. The hourly wages for skilled and unskilled operatives employed in the cutting department are $16 and $10 per hour. respectively. All operatives in the machining and pressing department are paid $12 an hour. Planned total Service cost center cost incurred for the benefit of other cost centers, as follows: Engineering Personnel overheads services services Product cost centers Cutting $121,000 15% 40% Machining $65,000 50% 30% Pressing $55,000 35% 10% Service cost Engineering $90,000 20% centers Personnel $50,000 Required: a) Prepare the overhead of the product cost center. b) Determine the predetermined overhead rate for each product cost center. c) Derive the total planned cost of: (i) One completed unit of product X. (ii) One incomplete unit of product Y, which has been processed by the cutting and machining departments but which has not yet been passed into the pressing department. (iii) One completed unit of product Z. QUESTION 4 4 (Total: 25 marks) The figure below is a summary of RST's business plan to produce three products X, Y, and Z in three product cost centers next year. Production Direct labor requirements: Direct material cost Cutting department: Skilled operatives Unskilled operatives Machining department Pressing department Machine requirements: Machining department X 4,000 units Y 2,000 units Z 6,000 units $7 per unit $4 per unit $9 per unit 3 hr/unit 6 hr/unit 5 hr/unit 2 hr/unit 1 hr/unit 1/2 hr/unit 1/4 hr/unit 3 hr/unit 1/3 hr/unit 2 hr/unit 3 hr/unit 4 hr/unit 2 hr/unit 1.5 hr/unit 2.5 hr/unit The business operates a full absorption costing system. The hourly wages for skilled and unskilled operatives employed in the cutting department are $16 and $10 per hour. respectively. All operatives in the machining and pressing department are paid $12 an hour. Planned total Service cost center cost incurred for the benefit of other cost centers, as follows: Engineering Personnel overheads services services Product cost centers Cutting $121,000 15% 40% Machining $65,000 50% 30% Pressing $55,000 35% 10% Service cost Engineering $90,000 20% centers Personnel $50,000 Required: a) Prepare the overhead of the product cost center. b) Determine the predetermined overhead rate for each product cost center. c) Derive the total planned cost of: (i) One completed unit of product X. (ii) One incomplete unit of product Y, which has been processed by the cutting and machining departments but which has not yet been passed into the pressing department. (iii) One completed unit of product Z. QUESTION 4 4 (Total: 25 marks)

Answer rating: 100% (QA)

Answer a Prepare the overhead of the product cost center To calculate the overhead for each product cost center we need to consider the direct labor hours and the service cost center costs incurred fo... View the full answer