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Q2 The following data relate to a manufacturing department for a period: Budgeted data for the...

Q2

The following data relate to a manufacturing department for a period:

Budgeted data for the coming year are as follows:

Direct labour hours 60,000 hours

Machine hours 55,000 hours

Direct labour cost $110,000

Direct material cost $125,000

Production overhead $70,400

Actual data for the period are as follows:

Direct labour hours 55,500 hours

Machine hours 40,000

Direct labour cost $125,000

Direct material cost $150,000

Production overhead $67,800

Required: (1) Calculate the production overhead absorption rate predetermined for the period based on : i. Machine hours; ii.

Required: (1) Calculate the production overhead absorption rate predetermined for the period based on : i. Machine hours; ii. Direct labour hours (2) Two pieces of furniture are to be manufactured for customers. Direct costs are as follows: Job 123 Job 124 Direct material $15,400 $10,800 Direct labour 210 hours Dept. A @$16/ hour: 160 hours Dept. A @20/hour 120 hours Dept. B @$12/hour; 100 hours Dept. B @$18/hour 100 hours Dept. C @$14/hour; 140 hours Dept. [email protected]$10/hour Selling and administrative overheads for each job are 10% of factory cost. Required: (b) Calculate the total costs of each job using all the two bases in question (1) above. (c) If the firm quotes prices to customers that reflect a required profit of 25 per cent on selling price, calculate the quoted selling price for each job.
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Solution: Production overhead absolphion rate as per machine hours $67800 Production offs machine hours 4 ou o has $ 1.695 p(6) Statement showing total cost of each job (As per Machine hours) Particulars Job 123 $ 15400 Job 124 $ 10 800 Direct Materक $ 5550 overheads (beiny 10% of 5110 Selling and administrative factory cost). of 55500] [10.. 51100 ) [104 61050 56210 Tota(c) calculating selling fruce for each Job. if 25%. Erupit required on selling Price. Total Cost as fer machine Horus Job 124

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