Kofi Brokeman uses a predetermined overhead rate to allocate overhead. Overhead is allocated on the basis of direct labour hours in department 1 and on the basis of machine hours in department 2. At the beginning of the year, the following estimates are provided:

Department One Department Two

Direct Labour Hours 100,000 20,000

Machine Hours 10,000 30,000

Direct Labour Cost 750,000 160,000

Overhead Cost 250,000 162,000

Actual Costs reported for all jobs during the year are as follows:

Department One Department Two

Direct Labour Hours 98,000 21,000

Machine Hour 11,000 32,000

Direct Labour Cost 748,000 168,000

Overhead Cost 247,500 175,000

The accounting records of the company show the following data for Job 60 which was done for Naya Ltd.

Department One Department Two

Direct Labour Hours 125 50

Machine Hours 10 205

Direct Material Cost 1,580 2,650

Direct Labour Cost 937 400

Required:

a. Compute the predetermined overhead absorption rate (OAR) for each department.

b. Compute the total cost for Job 60.

c. If there are 50 units in Job 60, what is the unit cost?

d. If the firm anticipates a profit margin of 25%, determine the selling price for a unit of Job 60

Kofi Brokeman uses a predetermined overhead rate to allocate overhead. Overhead is allocated on the basis of direct labour hours in department 1 and on the basis of machine hours in department 2. At the beginning of the year, the following estimates are provided:

Department One Department Two

Direct Labour Hours 100,000 20,000

Machine Hours 10,000 30,000

Direct Labour Cost 750,000 160,000

Overhead Cost 250,000 162,000

Actual Costs reported for all jobs during the year are as follows:

Department One Department Two

Direct Labour Hours 98,000 21,000

Machine Hour 11,000 32,000

Direct Labour Cost 748,000 168,000

Overhead Cost 247,500 175,000

The accounting records of the company show the following data for Job 60 which was done for Naya Ltd.

Department One Department Two

Direct Labour Hours 125 50

Machine Hours 10 205

Direct Material Cost 1,580 2,650

Direct Labour Cost 937 400

Required:

a. Compute the predetermined overhead absorption rate (OAR) for each department.

b. Compute the total cost for Job 60.

c. If there are 50 units in Job 60, what is the unit cost?

d. If the firm anticipates a profit margin of 25%, determine the selling price for a unit of Job 60