Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You have been asked to suggest a method of deducing the full cost of various production orders of Basil Ltd. This method will be used
You have been asked to suggest a method of deducing the full cost of various production orders of Basil Ltd. This method will be used as a basis for setting prices. The production orders vary greatly in size and nature from one to the next.The following information has been taken from the budget for the forthcoming financial year:
Practice Question 2: Basil Ltd You have been asked to suggest a method of deducing the full cost of various production orders of Basil Ltd. This method will be used as a basis for setting prices. The production orders vary greatly in size and nature from one to the next The following information has been taken from the budget for the forthcoming financial year: Direct labour Direct materials Overheads 400,000 100,000 450,000 Direct materials Direct labour hours Machine hours 10,000 kg 50,000 hours 45,000 hours The business is not departmentalised for accounting purposes. All direct labour is paid the same hourly rate. Basil Ltd has currently received a new order which has the following costs: Direct materials 450 kg Direct labour hours 2,000 hours Machine hours 500 hours Required: (a) Prepare full costings for new order using the following methods allocating total overheads: - Overhead rate based on labour hour basis - overhead rate based on machine hour basis (b) State briefly which of the two bases of overheads you prefer and why
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started