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a) Prepare in columnar form a statement calculating the overhead absorption rates for each direct labour hour for each of the three production units. You should use bases of apportionment and absorption which you consider most appropriate and the bases should be clearly indicated in your statement. b) Determine the price to be quoted for a customer order using the information below: Direct material Direct labour 2500 5 hours @ 10GHS per hour 10 hours @ 10GHS per hour 12 hours @ 10GHS per hour The company wants to make a profit of 30% on the total product cost. Cutting Tents Sleeping bags c) At the end of the period, actual labour hours worked are as follows: 7000hours Cutting room Tents 50000hours 60000hours Sleeping bags The total actual overhead cost incurred was 360,000GHS. Determine the amount of over/ under absorption of overheads. How will this amount be treated in the statement of profit or loss of

a) Prepare in columnar form a statement calculating the overhead absorption rates for each direct labour hour for each of the three production units. You should use bases of apportionment and absorption which you consider most appropriate and the bases should be clearly indicated in your statement. b) Determine the price to be quoted for a customer order using the information below: Direct material Direct labour 2500 5 hours @ 10GHS per hour 10 hours @ 10GHS per hour 12 hours @ 10GHS per hour The company wants to make a profit of 30% on the total product cost. Cutting Tents Sleeping bags c) At the end of the period, actual labour hours worked are as follows: 7000hours Cutting room Tents 50000hours 60000hours Sleeping bags The total actual overhead cost incurred was 360,000GHS. Determine the amount of over/ under absorption of overheads. How will this amount be treated in the statement of profit or loss of

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter4: Job-order Costing And Overhead Application
Section: Chapter Questions
Problem 57P: Overhead Rates, Unit Costs Folsom Company manufactures specialty tools to customer order. There are...
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Question 1 Dunstan Ltd manufactures tents and sleeping bags in three separate production departments. The principal manufacturing processes consist of cutting material in the pattern cutting room and sewing the material in either the tent or the sleeping bag departments. For the year to 31 July cost centre expenses and other relevant information are budgeted as follows: Cutting Tents room (GHS) Total Sleeping Raw Maintenance |(GHS) bags |(GHS) | (GHS) (GHS) material stores (GHS) 41200 Indirect wages Consumable materials Plant depreciation Power Heat and light Rent and rates Building insurance Floor area (sq. ft) Estimated power usage (%) Direct labour (hours) Machine usage (hours) Value of raw material issues |(%) 132200 35900 80800 6400 5300 31200 19500 4100 20100 2300 24600 | 45000 24200 5000 17500 2500 31700 13800 14400 13500 27500 100 112000 87000 100 8000 17 7000 2000 10000 7000 32 48000 1500 1000 38 6. 57000 | 40000 45000 70 15 15 a) Prepare in columnar form a statement calculating the overhead absorption rates for each direct labour hour for each of the three production units. You should use bases of apportionment and absorption which you consider most appropriate and the bases should be clearly indicated in your statement. b) Determine the price to be quoted for a customer order using the information below: Direct material Direct labour 2500 5 hours @ 10GHS per hour 10 hours @ 10GHS per hour 12 hours @ 10GHS per hour The company wants to make a profit of 30% on the total product cost. Cutting Tents Sleeping bags c) At the end of the period, actual labour hours worked are as follows: 7000hours Cutting room 50000hours 60000hours Tents Sleeping bags The total actual overhead cost incurred was 360,000GHS. Determine the amount of over/ under absorption of overheads. How will this amount be treated in the statement of profit or loss of Dunstan Itd?
Transcribed Image Text:Question 1 Dunstan Ltd manufactures tents and sleeping bags in three separate production departments. The principal manufacturing processes consist of cutting material in the pattern cutting room and sewing the material in either the tent or the sleeping bag departments. For the year to 31 July cost centre expenses and other relevant information are budgeted as follows: Cutting Tents room (GHS) Total Sleeping Raw Maintenance |(GHS) bags |(GHS) | (GHS) (GHS) material stores (GHS) 41200 Indirect wages Consumable materials Plant depreciation Power Heat and light Rent and rates Building insurance Floor area (sq. ft) Estimated power usage (%) Direct labour (hours) Machine usage (hours) Value of raw material issues |(%) 132200 35900 80800 6400 5300 31200 19500 4100 20100 2300 24600 | 45000 24200 5000 17500 2500 31700 13800 14400 13500 27500 100 112000 87000 100 8000 17 7000 2000 10000 7000 32 48000 1500 1000 38 6. 57000 | 40000 45000 70 15 15 a) Prepare in columnar form a statement calculating the overhead absorption rates for each direct labour hour for each of the three production units. You should use bases of apportionment and absorption which you consider most appropriate and the bases should be clearly indicated in your statement. b) Determine the price to be quoted for a customer order using the information below: Direct material Direct labour 2500 5 hours @ 10GHS per hour 10 hours @ 10GHS per hour 12 hours @ 10GHS per hour The company wants to make a profit of 30% on the total product cost. Cutting Tents Sleeping bags c) At the end of the period, actual labour hours worked are as follows: 7000hours Cutting room 50000hours 60000hours Tents Sleeping bags The total actual overhead cost incurred was 360,000GHS. Determine the amount of over/ under absorption of overheads. How will this amount be treated in the statement of profit or loss of Dunstan Itd?
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