Homework 03 The following information has been taken from the budget for the forthcoming financial year: Direct labour hours 100,000 hours Machine hours 90,000 hours All in Machining Manufacturing costs: Power 40,000 Direct materials 200,000 Machine maintenance and repairs 38,000 Factory heat and light 4,000 Cleaning materials 6,000 Direct labour 600,000 Depreciation of Factory Buildings 130,000 Depreciation of Machinery 402,000 Indirect labour 100,000 Total 1,520,000 The business has 2 departments: Machining and Assembly. The following information will help you to split the Overhead costs between the 2 departments: 80% of Power cost goes to Machining department. The Assembly department needed 8,000 of Maintenance and repairs. The Factory head and light and Cleaning materials is split evenly between the departments. The assembly department used 80,000 hours of Direct Labor during the year. Depreciation of factory building is split evenly while the Machinery depreciation goes all to the Machining Department Indirect Labor is apportioned according to the Direct Labor proportions. All direct labour is paid the same hourly rate. Required: (a) Calculate two OH rates for the 2 departments. (b) Prepare full costings for Order No 101 using each of the rates calculated in (a) The cost sheet for Order No 101 shows the following: Raw materials 15,000 Direct labour hours 4,000 hours (500 of which were in the Machining department) Machine hours 1,900 hours You have been asked to suggest a method of deducing the full cost of various production orders of Patel Ltd. This method will be used as a basis for setting prices. The production orders vary greatly in size and nature from one to the next