Quincy Ltd uses job order costing for its production system. The company uses machine hours to apply its overhead to work in process. On 1 September 2020, the management estimated that the company would incur $680,000 in manufacturing overhead costs and 64 000 machine hours for the coming year.

Required:

(a) Calculate the predetermined overhead rate. (b) Assume that Beautiful Bottles Pty Ltd used only 61 000 machine hours and incurred the following costs in 2021:			15 marks
	Maintenance	$ 64 000
	Depreciation	210 000
	Indirect materials	84 000
	Utilities	172 000
	Insurance	92 000
Calculate over/under applied overhead and prepare the journal entry to write off any under- or over-applied overhead against cost of goods sold in 2021.				15 marks

Question 2 = 70%

Keira Ville childcare provides day-care service for children from 1 to under 5 years old during week days. Its monthly variable costs per child are:

Lunch and snacks	$130
Educational supplies	75
Other supplies (paper products, toiletries etc)	35

Monthly fixed costs consist of:

Rental of building	$2 100
Utilities	400
Insurance	250
Salaries	1 400
Miscellaneous	650

Keira Ville charges each parent $640 per child.

Required:

1. Calculate the break-even point	20 marks
2. Keira Villes target profit is $10 800 per month. Calculate the number of children who must be enrolled to achieve the target profit.	20 marks
3. Keira Ville lost its lease and had to move to another building. Monthly rent for the new building is $3 500. At the suggestion of parents, Keira Ville plans to take children on field trips. Monthly costs of the field trips are $2 500. By how much should Keira Ville increase fees per child to meet the target profit of $10 800 per month, assuming the same number of children as in requirement 2?