Question 1

The following information relates to the activities of production departments for the month of May.

Budgeted: Estimated overhead 4800

Material estimated 2600

Labour hours 28000

Machine hours 19500

Direct wages 3500

On completion of Job KT50 the following information was obtained.

Material cost 350

Direct wages cost 285

Labour hours worked 1600

Machine hours 2200

1. You are required to calculate by different methods the overheads, which may be charged to the job.
2. Prepare a comparative cost statement to determine the selling price assuming that the company has 25% margin on sales.
3. Advise management on the basis of selling prices in (b) above