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Question 2 (5 marks) Company Aqua Ltd. has 3 departments with the following information: Manufacturing Finishing Department Department Floor space (square meter) 1000 1000
Question 2 (5 marks) Company Aqua Ltd. has 3 departments with the following information: Manufacturing Finishing Department Department Floor space (square meter) 1000 1000 Employees (people) 50 30 Book value of equipment ($) 150,000 105,000 Machine hours (hours) 10,000 2,500 Selling & Administrative Department 500 20 45,000 The general overhead costs of the month are: Rent: $200.000 Electricity & Heating: $30,000 Depreciation of equipment: $80,000 Requirements: 2.1. Determine the basis of apportionment for each general overhead cost of the company. Apportion the overheads accordingly to the three departments? 2.2. The company absorbs the expenses of the Selling & Admin Department to Manufacturing and Finishing Departments based on machine hours. Calculate the total overheads of each department. Calculate the absorption rate based on machine hours of each department? 2.3. In the period the company produced 5,000 products with the following information: Manufacturing Department Finishing Department Direct Materials Direct Labors Machine hours $35,000 $20,000 1,000 hours at $10 per hour 4,000 hour at $8 per hour 2,000 800 Calculate the unit cost of the company's product? 2.4. What should the company price their products to achieve a profit margin of 20%?
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