Lungameni Enterprises (Pty) Ltd (Lungameni Enterprises) manufactures product A, which it sells to local customers at...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Lungameni Enterprises (Pty) Ltd ("Lungameni Enterprises") manufactures product A, which it sells to local customers at a mark-up of 25%. Lungameni Enterprises currently absorbs its overhead costs on the basis of direct labour hours. During the month of May 2021, production volume for product A was estimated at 1000 units. However, only 80% of production volume was achieved. As a standard practice, each unit of product A requires 0.5 hours at an hourly rate of N$8.50. The 80% production volume was produced at 45 minutes per unit, and at an hourly rate of N$8.00. Lungameni Enterprises buys its raw materials from a local supplier at N$3.50 per kilogram. Each unit requires 1.5 kilograms. Two kilograms were used per unit, and there was no change in price of raw materials. Total monthly budgeted manufacturing overhead costs amounted to N$950, whereas actual monthly manufacturing overhead costs amounted to N$1 200. As a cost reduction measure, Lungameni Enterprises' production manager is of the view that manufacturing overhead costs should be absorbed on the basis of direct labour cost. There was no opening inventory and all units produced were sold. REQUIRED: MARKS For the month of May 2021, on the basis of gross profit/(loss), do you agree with Lungameni Enterprises' production manager's recommendation? Show all your 30 workings. Lungameni Enterprises (Pty) Ltd ("Lungameni Enterprises") manufactures product A, which it sells to local customers at a mark-up of 25%. Lungameni Enterprises currently absorbs its overhead costs on the basis of direct labour hours. During the month of May 2021, production volume for product A was estimated at 1000 units. However, only 80% of production volume was achieved. As a standard practice, each unit of product A requires 0.5 hours at an hourly rate of N$8.50. The 80% production volume was produced at 45 minutes per unit, and at an hourly rate of N$8.00. Lungameni Enterprises buys its raw materials from a local supplier at N$3.50 per kilogram. Each unit requires 1.5 kilograms. Two kilograms were used per unit, and there was no change in price of raw materials. Total monthly budgeted manufacturing overhead costs amounted to N$950, whereas actual monthly manufacturing overhead costs amounted to N$1 200. As a cost reduction measure, Lungameni Enterprises' production manager is of the view that manufacturing overhead costs should be absorbed on the basis of direct labour cost. There was no opening inventory and all units produced were sold. REQUIRED: MARKS For the month of May 2021, on the basis of gross profit/(loss), do you agree with Lungameni Enterprises' production manager's recommendation? Show all your 30 workings.
Expert Answer:
Answer rating: 100% (QA)
Estimated Calculation of Lungameni Enterprises Sweet Glad to Expect... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
A department store apportions payroll costs on the basis of the number of payroll checks issued. Accounting costs are apportioned on the basis of the number of reports. The payroll costs for the year...
-
The Fieldale Dairy produces cheese, which it sells to supermarkets and food processing companies. Because of concerns about cholesterol and fat in cheese, the company has seen demand for its products...
-
Natural Cosmetics Company applies overhead costs on the basis of machine hours. The overhead rate is computed by analyzing data from the previous year to determine the percentage change in costs....
-
What are some Marketing Strategies for Delivering Objectives Polestar (Car company) has used or using?
-
The ledger of Lentz Company includes the following unadjusted balances: Prepaid Insurance $3,000, Service Revenue $58,000, and Salaries and Wages Expense $25,000. Adjusting entries are required for...
-
In Problems 2734, find the inverse of each one-to-one function. State the domain and the range of each inverse function. Title Star Wars: The Force Awakens Avengers: Endgame Avatar Black Panther...
-
Determine the stiffness matrix for a \([+45 /-45]\) antisymmetric laminate consisting of 0.25-mm-thick unidirectional AS/3501 carbon/epoxy plies.
-
Inferring Operating Transactions and Preparing an Income Statement and Balance Sheet Kate's Kite Company (a corporation) sells and repairs kites from manufacturers around the world. Its stores are...
-
Explore and discuss the provisions and requirements of legislation or international standards such as the Payment Card Industry - Data Security Standard (PCI-DSS) Official PCI Security Standards...
-
New Age Solar sells and installs solar panels for residential homes. The companys sales representatives contact and pay a personal visit to potential customers to present the benefits of installing...
-
Contemporary Project Management, questions Explain the "time value of money" and why it is important in project management. Difference between direct and indirect costs A rockslide closes down a...
-
What are some of the output design guidelines?
-
What are the three essentials for each BMP activity?
-
How does the benefit management framework relate to the process architecture?
-
Can you name five project gates?
-
Why are project gates important?
-
Trace the following flowchart by completing the corresponding trace table for the input 5 as N: Start Read N RER N REN N>1 NEN-1 True False 1-t Print R Stop Tracing Table
-
The Thomas Corporation was organized on Jan. 1, 2020. On Dec. 31, 2021, the corporation lost most of its inventory in a warehouse fire before the year-end count of inventory was to take place. just...
-
Kate Petusky prepared Addison Controls balance sheet and income statement for 2020. Before she could complete the statement of cash flows, she had to leave town to attend to a family emergency....
-
How should a company that is operating at capacity decide whether to accept a special order?
-
Rider Auto has developed the following production plan for its new auto part. Each unit contains four pounds of raw material. The desired raw materials ending inventory is 40% of the next months...
-
Figure 4 shows a scatterplot for the variables life expectancy and infant mortality in 16 countries. What type of correlation does it show? Does this correlation make sense? Does it imply causality?...
-
Figure 5 shows a scatterplot for the variables number of farms and mean farm size in the United States. Each dot represents data from a single year between 1950 and 2000; on this diagram, the earlier...
-
The scatterplots in Figure 6 show two weeks of data comparing the actual high temperature for the day with the same-day forecast (part a) and the three-day forecast (part b). Estimate the correlation...
Study smarter with the SolutionInn App