Question
The following information relates to Gulf BSc., a manufacturing company that has two manufacturing departments and two service departments: Manufacturing Manufacturing Service Service Total Dept.
The following information relates to Gulf BSc., a manufacturing company that has two manufacturing departments and two service departments: Manufacturing Manufacturing Service Service Total Dept. 1 Dept. 2 Dept. 1 Dept.2 BD BD BD BD BD Allocated Overheads 32,400 29,200 12,400 12,850 86,850 General Overheads: Indirect Labour 32,000 Heat & Light 48,600 Repairs & Maintenance 34,700 Canteen Subsidy 5,100 Machine Depreciation 10,400 Machine Insurance 6,250 223,900 The following additional information was extracted from the companys management accounting records. Manufacturing Manufacturing Service Service Dept. 1 Dept. 2 Dept. 1 Dept. 2 Floor area sq. m 2,500 4,000 1,000 500 Direct labour hours 30,000 5,000 - - Indirect labour hours 30,000 5,000 - - Direct labour rate per hour BD 12 8 - - Number of staff 30 5 - - Machine hours 2,500 25,000 - - Machine value BD 40,000 200,000 10,000 - Service Dept. overheads are to be re apportioned using direct method as follows:
Manufacturing Manufacturing Dept. 1 Dept. 2 Service Dept. 1 overheads 20% 80% Service Dept. 2 overheads 50% 50% Data on two jobs being undertaken by the company is as follows: Gulfi 1 Gulfi 2 Direct materials cost BD 240 BD 420 Machine hours 5 20 Direct labour hours: -Manufacturing Dept.1 40 25 -Manufacturing Dept.2 4 5 Required:
d) Gulf BSc. policy is to accept only the jobs that provide a profit markup of 30%. Should Gulf BSc. accept these two jobs, knowing that the suggested job prices for Gulfi 1 and Gulfi 2 are BD 1,100 and BD 1,300 respectively.
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