Question
Question 1 : Function-based costing JIM Ltd has identified the following overhead costs and cost drivers for next year Expenses /cost Expected ( cost) $
Question 1 : Function-based costing
JIM Ltd has identified the following overhead costs and cost drivers for next year
Expenses /cost | Expected ( cost) $ |
Selling cost | 45,000 |
Administration Cost | 35,000 |
Manufacturing overhead cost | 108,000 |
Utilities cost [store] | 12,000 |
Cost Drivers: |
|
Product X | Machine Hours |
Product Y | Direct Labour Hours |
Direct Labour Hours | 12,000 hours |
Machine Hours | 18,000 hours |
The following is the cost of 2 products made by the company:
| Product X | Product Y |
Direct materials | $4200 | $2600 |
Direct Labor Hour Rate | $10.50 | $16.50 |
Units completed | 150 | 200 |
DLH (hours) | 560 | 420 |
Machine hours | 660 | 240 |
Actual Cost | $ 3200 | 42100 |
REQUIRED
- Calculate the Predetermined Rate [PR] for product X using machine hours and product Y using direct labour hours
- What is the applied cost assigned to product X and product Y?
- Calculate the total product cost using FBC for both products
- Calculate the unit cost for each product
- Is the applied cost for product X under or over-applied? What effect this will have on the cost of goods sold and the Net income ?
- Is the applied cost for product Y under or over-applied? What effect this will have on the cost of goods sold and the Net income
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