The following budgeted data is for S. Williams Enterprise who manufactures and sells furniture. Be sure to round all figures to two (2) decimal places.

Labour Hours

Machine Hours

2,800 hours

5,700 hours

Direct Wages$ 7,200Direct Materials$15,000Total Units produced for period1,070 unitsTotal Overheads for period$25,800

a. Calculate the predetermined overhead rates for S. Williams Enterprise using the following bases:

1. Labour Hours
2. Machine Hours
3. Percentage of Prime Cost
4. Percentage of Wages
5. Unit Cost of Production

b. For one cost unit, the following information is available:

Machine Hours 17 hours

Direct LabourHours 11 hours

Direct Wage $ 35

Direct Materials Used $ 33

Calculate the total costs of this unit using each of the absorption bases calculated in (a).

c. Cost Centre 1, the department that manufactures some of the cost units, comprises of a number of numerically controlled machine tools with semi-skilled operators. Over half of the cost centers overheads relate to machine depreciation.

What basis of overhead absorption would you recommend for Cost Centre 1? Give TWO reasons for your choice.

d. Cost Centre 5 absorbs overheads on the basis of labour hours. The actual overheads for Cost Centre 5 is $122,514 but S. Williams Enterprises budgeted for $115,000.

The direct labour hours budgeted is 11,200 hours. However, the records indicate that 11,850 was used during the period.

1. Determine if the overheads for Cost Center 5 were over or under absorbed.
2. State THREE reasons why overheads may be over or under absorbed.