Intermediate: Overhead analysis and calculation of product costs A furniture-making business manufactures quality furniture to customers’ orders. It has three produc¬ tion departments and two service departments. Budgeted overhead costs for the coming year are as follows:

Required:

(a) Prepare a statement showing the overhead cost budgeted for each department, showing the basis of apportionment used. Also calculate suitable overhead absorption rates. (9 marks)

(b) Two pieces of furniture are to be manufac¬ tured for customers. Direct costs are as follows:

Calculate the total costs of each job.
(5 marks)

(c) If the firm quotes prices to customers that reflect a required profit of 25% on selling price, calculate the quoted selling price for each job. (2 marks)

(d) If material costs are a significant part of total costs in a manufacturing company, describe a system of material control that might be used in order to effectively control costs, paying particular attention to the stock control aspect.

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Rent and Rates Machine insurance Telephone charges Total () 12 800 6000 3 200