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Section B 1000 Question 1 Dunstan Ltd manufactures tents and sleeping bags in three separate production departments. The principal manufacturing processes consist of cutting material

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Section B 1000 Question 1 Dunstan Ltd manufactures tents and sleeping bags in three separate production departments. The principal manufacturing processes consist of cutting material in the pattern cutting room and sewing the material in either the tent or the sleeping bag departments. For the year to 31 July cost centre expenses and other relevant information are budgeted as follows: Total Cutting Tents Sleeping Raw Maintenance (GHS) room (GHS) bags material (GHS) (GHS) (GHS) stores (GHS) Indirect wages 132200 6400 19500 20100 41200 45000 Consumable materials 35900 5300 4100 2300 24200 Plant depreciation 80800 31200 17500 24600 2500 5000 Power 31700 Heat and light 13800 Rent and rates 14400 Building insurance 13500 Floor area (sq. ft) 27500 8000 10000 7000 1500 Estimated power usage (%) 100 17 38 32 7 6 Direct labour (hours) 112000 7000 48000 57000 Machine usage (hours) 87000 2000 40000 45000 Value of raw material issues 100 70 15 15 (%) a) Prepare in columnar form a statement calculating the overhead absorption rates for each direct labour hour for each of the three production units. You should use bases of apportionment and absorption which you consider most appropriate and the bases should be clearly indicated in your statement. b) Determine the price to be quoted for a customer order using the information below: Direct material 2500 Direct labour Cutting 5 hours @ 10GHS per hour Tents 10 hours @ 10GHS per hour Sleeping bags 12 hours @ 10GHS per hour The company wants to make a profit of 30% on the total product cost. c) At the end of the period, actual labour hours worked are as follows: Cutting room 7000 hours Tents 50000hours Sleeping bags 60000 hours The total actual overhead cost incurred was 360,000GHS. Determine the amount of over/under absorption of overheads. How will this amount be treated in the statement of profit or loss of Dunstan Itd

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