Q2

The following data relate to a manufacturing department for a period:

Budgeted data for the coming year are as follows:

Direct labour hours 60,000 hours

Machine hours 55,000 hours

Direct labour cost $110,000

Direct material cost $125,000

Production overhead $70,400

Actual data for the period are as follows:

Direct labour hours 55,500 hours

Machine hours 40,000

Direct labour cost $125,000

Direct material cost $150,000

Production overhead $67,800

Required:

(1) Calculate the production overhead absorption rate predetermined for the period based on :

i. Machine hours;

ii. Direct labour hours

(2) Two pieces of furniture are to be manufactured for customers. Direct costs are as follows:

Job 123Job 124

Direct material$15,400$10,800

Direct labour210 hours Dept. A@$16/ hour:160 hours Dept. A @20/hour

120 hours Dept. B @$12/hour; 100 hours Dept. B @$18/hour

100 hours Dept. C @$14/hour; 140 hours Dept. C@$10/hour

Selling and administrative overheads for each job are 10% of factory cost.

Required:

(b)Calculate the total costs of each job using all the two bases in question (1) above.

(c) If the firm quotes prices to customers that reflect a required profit of 25 per cent on selling price, calculate the quoted selling price for each job.

Required: (1) Calculate the production overhead absorption rate predetermined for the period based on : i. Machine hours; ii. Direct labour hours (2) Two pieces of furniture are to be manufactured for customers. Direct costs are as follows: Job 123 Job 124 Direct material $15,400 $10,800 Direct labour 210 hours Dept. A @$16/ hour: 160 hours Dept. A @20/hour 120 hours Dept. B @$12/hour; 100 hours Dept. B @$18/hour 100 hours Dept. C @$14/hour; 140 hours Dept. C@$10/hour Selling and administrative overheads for each job are 10% of factory cost. Required: (b) Calculate the total costs of each job using all the two bases in question (1) above. (c) If the firm quotes prices to customers that reflect a required profit of 25 per cent on selling price, calculate the quoted selling price for each job