Reference no: EM13516734
Overhead analysis and calculation of product costs
A furniture-making business manufactures quality furniture to customers' orders. It has three production departments and two service departments. Budgeted overhead costs for the coming year are as follows:
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Total (L)
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Rent and Rates
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12800
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Machine insurance
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6000
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Telephone charges
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3200
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Depreciation
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18000
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Production Supervisor's salaries
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24000
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Heating & Lighting
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6400
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70400
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The three production departments - A, B and C, and the two service departments - X and Y, are housed in the new premises, the details of which, together with other statistics and information, are given below.
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Departments
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|
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A
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B
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C
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X
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Y
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Floor area occupied (sq.metres)
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3000
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1800
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600
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600
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400
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Machine value (£000)
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24
|
10
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8
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4
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2
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Direct labour hrs budgeted
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3200
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1800
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1000
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|
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Labour rates per hour
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£3.80
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£3.50
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£3.40
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£3.00
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£3.00
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Allocated Overheads:
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|
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Specific to each department (£000)
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2.8
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1.7
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L2
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0.8
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0.6
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Service Department X's costs apportioned
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50%
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25%
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25%
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|
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Service Department Y's costs apportioned
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20%
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30%
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50%
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Required:
Prepare a statement showing the overhead cost budgeted for each department, showing the basis of apportionment use-a-Al so calculate suitable overhead absorption rates.
Two pieces of furniture are to be manufactured for customers. Direct costs are as follows:
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Job 123
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Job 124
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Direct Material
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£154
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£108
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Direct Labour
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20 hours Dept A
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16 hours Dept A
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12 hours Dept B
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10 hours Dept B
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10 hours Dept C
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14 hours Dept C
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Calculate the total costs of each job.
(c) If the firm quotes prices to customers that reflect a required profit of 25% on selling Trice, calculate the quoted selling price for each job.
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