3000 Bottles price 25782.6 2 years Website hosting 1201.28 Stickers printing price 5723.45 Shipment of stickers 2280 Delivery Order charges 3793.32 Customs duty 744 Clearance 360 Shipping documentation 413 MPL charges 554.38 Rent of warehouse 6500 Wages 3000 Raw Materials 4000 Unit Selling price 231 Annex 2. The following overhead information is also available Production Packing Administration Direct Costs (MVR) 7,000 34,530.05 - Overheads (MVR) 6,500 5,120.7 1201.28 Administration Usage (in %) 20% 80% Labour hours 4500 hrs 1500 hrs Using the information in Annex 2, prepare an overhead summary, showing clearly the total overheads for each department. Prepare the following calculations using the total overhead for each department: i. Calculate the Overhead Absorption Rate (OAR) based on Labour hours. ii. Calculate Overhead Absorption Rate (OAR) based on number of units (for 3000 units) iii. Calculate the Total Cost per unit from the available information (use OAR based on cost per unit) iv. Which of the above absorption bases is more suitable for Raajje Fresh?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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3000 Bottles price 25782.6
2 years Website hosting 1201.28
Stickers printing price 5723.45
Shipment of stickers 2280
Delivery Order charges 3793.32
Customs duty 744
Clearance 360
Shipping documentation 413
MPL charges 554.38
Rent of warehouse 6500
Wages 3000
Raw Materials 4000
Unit Selling price 231

Annex 2.
The following overhead information is also
available

Production Packing Administration
Direct Costs (MVR) 7,000 34,530.05 -
Overheads (MVR) 6,500 5,120.7 1201.28
Administration Usage (in %) 20% 80%
Labour hours 4500 hrs 1500 hrs

Using the information in Annex 2, prepare an overhead summary, showing clearly the total
overheads for each department. Prepare the following calculations using the total overhead for
each department:
i. Calculate the Overhead Absorption Rate (OAR) based on Labour hours.
ii. Calculate Overhead Absorption Rate (OAR) based on number of units (for 3000 units)
iii. Calculate the Total Cost per unit from the available information (use OAR based on cost
per unit)
iv. Which of the above absorption bases is more suitable for Raajje Fresh?

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