Answered step by step
Verified Expert Solution
Question
1 Approved Answer
kindly solve part 2 of question as soon as possible Motor Ltd. is a company specialised in manufacturing and selling car battery chargers. The manufacturing
kindly solve part 2 of question as soon as possible
Motor Ltd. is a company specialised in manufacturing and selling car battery chargers. The manufacturing process involves two main departments: Department A deals with battery assembly and Department B deals with pack mounting. Motor Ltd. (1) currently uses a plant-wide overhead rate based on direct labour hours for allocating overhead costs. For the current quarter, the budget includes 130,000 for overhead costs, 24,000 for direct labour costs in Department A (battery assembly) paid at 16 per hour, and 60,000 for direct labour costs in Department B (pack mounting) paid at 12 per hour. Motor Ltd. is workina on two iobs which reauire the followina insuts: The number of units produced for Job X is 1,000 , while for Job Y is 900 . Motor Ltd. has hired Giulia, a new management accountant, who suggests replacing the current allocation system based on a plant-wide rate with (2) departmental overhead rates where assembly overhead of 64,000 is allocated based on machine hours (16,000 hours) and pack mounting overhead of 66,000 is allocated based on pack mounting direct labour hours. Based on her experience in the industry, Giulia suggests also to implement an (3) activity based costing system, taking into account that the company is growing and the complexity of the business is increasing. Giulia has identified the following activities, their estimated cost for the quarter, their cost drivers and cost driver quantities for the quarter included in the 130,000 overheads: Required: 1. Calculate the plant-wide overhead rate for the current quarter, and determine the total cost and cost per unit for each job. Where needed, show your answer to 2 decimal places. In so doing, ensure you show your workings clearly. (8 marks) 2. Recalculate the total and per unit cost for each job using departmental overhead rates (Assume Job X uses 2,400 machine hours to make 1000 units and Job Y uses 400 machine hours to make 900 units). Where needed, show your answer to 2 decimal places. In so doing, ensure you show your workings clearlyStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started