Question 3 Bambie Ltd applies overhead costs based on direct labour hours. The company has budgeted 50,000 direct labour hours at a cost of $10 per hour and total budgeted manufacturing overhead cost is estimated to be $750,000. During the month of June, the following events occurred: Raw materials purchased for $60,000 on cash. A requisition was filed by the production supervisor for 100 kilograms of raw material, which was originally purchased for $35 per kilogram. Direct labour costs of $20,000 were incurred during June. Depreciation of the factory building and equipment during June amounted to $3,000. Job number A11 was finished in June. The total cost of the job was $45,000. During June, the actual direct labour hours used were 5,000. Required: (a) Calculate the predetermined overhead rate for Bambie Ltd. (b) Prepare journal entries for the events occurred in June. (c) Bambie Ltd incurred annual overhead of $740,000 and direct labour hours used for the year were 45,000. Determine the amount of manufacturing overhead that was over or under applied during the year. Prepare a journal entry to close this balance into cost of goods sold. (d) Depreciation on factory building and equipment is classified as a fixed cost and electricity is classified as a curvilinear cost. For both these costs, suggest reasons for their respective behaviours. (2 +15+5+5 = 27 marks)