ads/2020%20Cost%20acc%201%20assignment%20question%20FINAL%20(1).pdf Question 2 Job costing (50 marks) Nomfundo Designs & Co. is a company that specializes in custom-made jewellery with three outlets in the Durban metropolis. As part of the company strategy, customers are provided with a selection of methods to place an order through its direct retail website, one of the stores or via telephone to its call centre located in the CBD. A completed customised piece is a combination of both direct costs (materials and labour costs) and indirect costs (equipment maintenance, postage fees, website hosting fees, electricity, rent, salaries, insurance, telephone cost, office computers, and processing fees). The company uses a predetermined overhead rate to apply overhead to jobs, and the company employs a job order costing system Overhead is applied to jobs in the Design Department based on the number of machine hours used. whereas Assembling Department overhead is applied on the basis of units produced A total of 1 400 units was produced. In December 2009, the company estimated the following data for its two departments for 2010 Design Department Assembling Department Direct labour hours 1 000 3 500 Machine hours 7 500 1 500 Budgeted overhead cost R60 000 R98 000 Job no 116 was started and completed during March 2010, and a total of 480 units were completed and sold at R125 per unit The job cost sheet shows direct material at R5 800 direct labour at R60 per labour hour 12 labour hours and 80 machine hours Page 6 of 2 5/2020%20c01%20ac%201%20assignment%20question%20FINAL%20(1).pdf In the Dealgn Dept. While the Assembling Dept. consists of R700 direct material, R525 direct labour cost, 60 direct labour hours and 22 machine hours. Required: a. What are the typical overheads that would be considered before the job commences? (1) b. Which costs of Nomfundo Design Co are fixed, variable or mixed costs? Your answer should be in a tabular format with the fixed, variable and mixed costs listed in separate columns (10) c. What methods can be used to separate mixed coup into fixed cost and variable costs? (3) d. Calculate the predetermined overhead rate that should be used in each department of Nomfundo's Company e Calculate the overhead applied to Job no116 for each department and the total cost for each department (10) f. Calculate the profit or loss for Job 116 g If the company had calculated a plant-wide rate for overhead rather than departmental rates, would the rate be indicative of the actual overhead cost of each job? Explain (2) h What is the main challenge of implementing a job costing system? (2) 1. Explain the difference between Job Costing and Contract Costing Provide three principles of recognising profit under contract costing ads/2020%20Cost%20acc%201%20assignment%20question%20FINAL%20(1).pdf Question 2 Job costing (50 marks) Nomfundo Designs & Co. is a company that specializes in custom-made jewellery with three outlets in the Durban metropolis. As part of the company strategy, customers are provided with a selection of methods to place an order through its direct retail website, one of the stores or via telephone to its call centre located in the CBD. A completed customised piece is a combination of both direct costs (materials and labour costs) and indirect costs (equipment maintenance, postage fees, website hosting fees, electricity, rent, salaries, insurance, telephone cost, office computers, and processing fees). The company uses a predetermined overhead rate to apply overhead to jobs, and the company employs a job order costing system Overhead is applied to jobs in the Design Department based on the number of machine hours used. whereas Assembling Department overhead is applied on the basis of units produced A total of 1 400 units was produced. In December 2009, the company estimated the following data for its two departments for 2010 Design Department Assembling Department Direct labour hours 1 000 3 500 Machine hours 7 500 1 500 Budgeted overhead cost R60 000 R98 000 Job no 116 was started and completed during March 2010, and a total of 480 units were completed and sold at R125 per unit The job cost sheet shows direct material at R5 800 direct labour at R60 per labour hour 12 labour hours and 80 machine hours Page 6 of 2 5/2020%20c01%20ac%201%20assignment%20question%20FINAL%20(1).pdf In the Dealgn Dept. While the Assembling Dept. consists of R700 direct material, R525 direct labour cost, 60 direct labour hours and 22 machine hours. Required: a. What are the typical overheads that would be considered before the job commences? (1) b. Which costs of Nomfundo Design Co are fixed, variable or mixed costs? Your answer should be in a tabular format with the fixed, variable and mixed costs listed in separate columns (10) c. What methods can be used to separate mixed coup into fixed cost and variable costs? (3) d. Calculate the predetermined overhead rate that should be used in each department of Nomfundo's Company e Calculate the overhead applied to Job no116 for each department and the total cost for each department (10) f. Calculate the profit or loss for Job 116 g If the company had calculated a plant-wide rate for overhead rather than departmental rates, would the rate be indicative of the actual overhead cost of each job? Explain (2) h What is the main challenge of implementing a job costing system? (2) 1. Explain the difference between Job Costing and Contract Costing Provide three principles of recognising profit under contract costing