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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

  1. Calculate the Predetermined Rate [PR] for product X using machine hours and product Y using direct labour hours
  2. What is the applied cost assigned to product X and product Y?
  3. Calculate the total product cost using FBC for both products
  4. Calculate the unit cost for each product
  5. 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 ?
  6. 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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