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One Ltd has two production departments, Machining and Assembly, and two service departments, Maintenance and Stores. For month 1, the company budgets its overhead costs
One Ltd has two production departments, Machining and Assembly, and two service departments, Maintenance and Stores. For month 1, the company budgets its overhead costs as Machine hours are budgeted at 3,000 and direct labour hours at 5,000 for the month. It has been established that the service department costs should be dealt with thus: At the end of the period, the actual costs were: The Machining department actually worked 2,900 machine hours and the Assembly department worked 5,200 direct labour hours. Required: (a) Calculate the overhead to be charged to the production departments for the month. (b) Calculate the under/over absorption of overhead in both production departments. (c) The company wishes to quote for a job to be completed in month 1, for which the following figures apply: If the company requires a profit for the job of 20% of the selling price, calculate the price to be quoted for the job
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