Question 1 Eastern Enterprises has three departments; Welding, Assembly and Spraying. Welding calculates its predetermined overhead...

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Question 1 Eastern Enterprises has three departments; Welding, Assembly and Spraying. Welding calculates its predetermined overhead absorption rate based on machine hours; Assembly is based on direct labour hours while Spraying is based on direct labour cost. On 2021 January 01, the company had the following estimates: WELDING ASSEMBLY SPRAYING Production overhead costs $720 000 $700 000 $412 500 Direct labour cost $35 000 $120 000 $150 000 Machine hours Direct labour hours 36 000 4000 2.500 5 000 20 000 8 000 The labour rate is $150 per hour for all departments. Job 303A which was started and completed during the year showed the following: WELDING ASSEMBLY SPRAYING Direct material Direct labour hours Machine hours $5.500 80 $7 200 $9 500 150 100 800 100 50 Rental of equipment for job 303A will amount to $35 275. Additional Information: Eastern Enterprises recovers selling, distribution and administrative overheads at a rate of 20% of production costs and profit is based on a margin of 20%. A. Compute overhead absorption rates for each department. (6 marks) B. Calculate the cost of Job 303A, clearly showing expected profit and selling price. (14 marks) Question 1 Eastern Enterprises has three departments; Welding, Assembly and Spraying. Welding calculates its predetermined overhead absorption rate based on machine hours; Assembly is based on direct labour hours while Spraying is based on direct labour cost. On 2021 January 01, the company had the following estimates: WELDING ASSEMBLY SPRAYING Production overhead costs $720 000 $700 000 $412 500 Direct labour cost $35 000 $120 000 $150 000 Machine hours Direct labour hours 36 000 4000 2.500 5 000 20 000 8 000 The labour rate is $150 per hour for all departments. Job 303A which was started and completed during the year showed the following: WELDING ASSEMBLY SPRAYING Direct material Direct labour hours Machine hours $5.500 80 $7 200 $9 500 150 100 800 100 50 Rental of equipment for job 303A will amount to $35 275. Additional Information: Eastern Enterprises recovers selling, distribution and administrative overheads at a rate of 20% of production costs and profit is based on a margin of 20%. A. Compute overhead absorption rates for each department. (6 marks) B. Calculate the cost of Job 303A, clearly showing expected profit and selling price. (14 marks)