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(iii) calculate the full product cost for the Tent XL09, taking into account the following information Tent XL09 Direct Materials $150 Direct labor hours in

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(iii) calculate the full product cost for the Tent XL09, taking into account the following information Tent XL09 Direct Materials $150 Direct labor hours in tent department 8 h Direct labor Rate (wage) per hour $18 Machine hours in cutting department 6 h Please not that overheads for cutting department are to be allocated based in machine hours in that department Overheads in the tent department are to be allocated based on direct labour hours. No work for the tent XL09 is done in the Sleeping Bag department. (b) The use of predetermined overhead absorption rates based on budgets is preferable to the use of absorption rates calculated from historical data available after the end of a financial period. Discuss this statement insofar as it relates to the financial management of a business.(5 marks) Mario the Saviour Ltd. manufactures tents and sleeping bags for tourists in three production departments: Cutting Room, Tents and Sleeping Bags. The whole process is organized in the following way: first, materials are cut in the cutting room and then are sewed in in either Tents or Sleeping Bags Departments. Additionally, Mario the Saviour Ltd. uses three Service Departments: Raw Material Stores, Canteen and Maintenance Departments. For the year to December, 31 cost centre expenses and other information are budgeted as follows: Total Cutting Tots Sleeping Raw can Maintenan Droom (1) aps material ce (6) stones Indirect wages 200,000 11.000 22.500 16.590 53.910 12,000 84,000 Consumable materials 75.500 3.500 1.300 22,600 31.900 Plant depreciation 84.000 40.500 16,000 15.000 3.000 5.600 3.900 Power 25,000 Heat and light 33,900 Rent and rates 7.850 Building insurance 29,550 Floor area (square feet) 42,100 12.000 5.900 3.200 5.000 Estimated power usage (%) 100% 25% 30% 6% 8% Direct labour (hours) 207,000 42.000 86.000 79,000 Machine usage (hours) 80,000 3,000 32.000 45.000 Value of raw material issues (%) 100% 45% 0% 17% 16.200 3.000 8.000 3% % - . - % 209 18% 0% Requirements: (1) Demonstrate in columnar form the statement, in which you should include calculations of overhead absorption rates for each machine hour and each direct labour hour for each of the three production units. (10 marks) Hint: use cost drivers which you consider most appropriate, and these bases should be clearly represented in your answer (ii) Reallocate costs of Raw Material Stores, Canteen and Maintenance Departments to all six Departments. Remember that the Canteen Department is allocated using labour hours and the Maintenance Department is based on machine hours. (5 marks) (iii) calculate the full product cost for the Tent XL09, taking into account the following information (iii) calculate the full product cost for the Tent XL09, taking into account the following information Tent XL09 Direct Materials $150 Direct labor hours in tent department 8 h Direct labor Rate (wage) per hour $18 Machine hours in cutting department 6 h Please not that overheads for cutting department are to be allocated based in machine hours in that department Overheads in the tent department are to be allocated based on direct labour hours. No work for the tent XL09 is done in the Sleeping Bag department. (b) The use of predetermined overhead absorption rates based on budgets is preferable to the use of absorption rates calculated from historical data available after the end of a financial period.' Discuss this statement insofar as it relates to the financial management of a business

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