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The Cost Centre has provided you with the following budgeted information in relation to production of this product: Direct Materials Ksh50 per unit Direct labour
The Cost Centre has provided you with the following budgeted information in relation to production of this product: Direct Materials Ksh50 per unit Direct labour Machining department (per 100 units) at Ksh5 per hour 4 hours Finishing department (per 20 units) !K:h6 per hour 3 hours Dispatch department labour (per 20 units packed) at K:h5 per hour 1 hour Packing boxes Kshl each Fixed Overheads: Machining department Absorbed at a rate of Ksh per machine hour (The manufacture of a batch of 100 units takes 5 machine hours) Finishing department Absorbed at a rate of Ksh4 per direct labour hour Dispatch department Absorbed at a rate of Kshl per unit packed The selling price is 200 per unit Planned production and sales for the next period are as follows: Production 3,000 units Sales 2,500 units There is no stock of packed or unpacked products, direct material or packing boxes at the beginning of the period. At the end of the period, it is expected to have no stock of packing boxes, and 400 units unpacked in the dispatch department. All other production in the period will be packed. In your cost statement: i. 2. Calculate the number of units completed and packed in the period. 6. Produce a budgeted Manufacturing and Trading account for the period using: Absorption costing ii. Marginal costing Reconcile the two (I & II) accounting methods. c Suggest to the company if they should go ahead with the product
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