Reference no: EM132816485

Question - Bambie Ltd applies overheads based on direct labour hours. The company has budgeted 50,000 direct labour hours at a cost of $10 per hour and total budgeted manufacturing overhead cost is estimated to be $750,000.

During the month of June, the following events occurred:

Raw materials purchased for $60,000 on cash.

A requisition was filed by the production supervisor for 100 kilograms of raw material, which was originally purchased for $35 per kilogram.

Direct labour costs of $20,000 were incurred during June.

Depreciation of the factory building and equipment during June amounted to $3,000.

Job number A11 was finished in June. The total cost of the job was $45,000.

During the June, the actual direct labour hours used were 5,000.

Required -

(a) Calculate the predetermined overhead rate for Bambie Ltd.

(b) Prepare journal entries for the events occurred in June.

(c) Bambie Ltd incurred annual overhead of $740,000 and direct labour hours used for the year were 45,000. Determine the amount of manufacturing overhead that was over or under applied during June. Prepare journal entry to close this balance into cost of goods sold.

(d) Depreciation on factory building and equipment is classified as a fixed cost and electricity is classified as a curvilinear cost. For both these costs, suggest reasons for their respective behaviours.