2: A furniture making business manufactures quality furniture to customers' orders. It has three production departments and two service departments. Budgeted overhead costs for the coming year are as follows

Rent and rates

12,800

Machine insurance

6,000

Telephone charges

3,200

Depreciation

18,000

Production supervisor's salaries

24,000

Heating and lighting

6,400

70,400

The three production departments - A, B and C, and the two service departments - X and Y, are housed in the new premises, the details of which, together with other statistics and information, are given as follows:

Departments

A B C X Y

Floor area occupied (sq. metres) 3,000 1,800 600 600 400

Machine value (000) 24 10 8 4 2

Direct labour hrs budgeted 3,200 1,800 1,000

Labour rates per hour 3.80 3.50 3.40 3 3

Allocated overheads:

Specific to each department (000)

2.8 1.7 1.2 0.8 0.6

Service department X's costs Apportioned 50% 25% 25%

Service department Y's costs apportioned 20% 30% 50%

Required

1.Prepare statement showing the overhead cost budgeted for each department, showing the basis of apportionment used. Also calculate suitable overhead absorption rates

2:(a)Two pieces of furniture are to be manufactured for customers. Direct costs are as follows:

Job 123 Job 124

Direct Material 154 108

Direct Labour

20 hours Dept A 16 hours Dept A

12 hours Dept B 10 hours Dept B

10 hours Dept C 14 hours Dept C

(a)Calculate the total costs of each job

(b)If the firm quotes prices to customers that reflect a required profit of 25 per cent on selling price, calculate the quoted selling price for each job.

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