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Dr. Asare Ltd. operates a printing press in a deprived village called Ahianse in the Eastern Region of Ghana. During October 2021, the plant at
Dr. Asare Ltd. operates a printing press in a deprived village called Ahianse in the Eastern Region of Ghana. During October 2021, the plant at the factory was was operating at full capacity. The material and labor costs of Job #200 and all other jobs worked on in October is as follows: Materials: Job200 = GHs10000, Other=GHs7000. Direct labour: job200 = GHs12000, other = GHs 28000. Overtime Premium: job200 = GHs4000, other = GHs 4000 In addition to the above costs, factory overheads incurred in October amounted to GHs44,000. Overhead is allocated to production based on direct labor costs. Required: 1. Show the factory's profit or loss on Job 200 using two different methods of accounting for overtime premium. Assume that the contract price for the job is GHs40,000. Indicate under what circumstances each method should be used. State whether the profit or loss of the company during October would be affected by the choice of one method or another. Note: Show answers only Your
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