Costs of the service departments, Cost Accounting

Assignment Help:

Bull Bay Ltd. Manufacturers two types of surfboard, "Winner" and "Surf King", whose selling prices are $300 and $900 respectively. Each surfboard passes through two manufacturing departments, Moulding and Finishing. In Moulding, each Winner requires 6 hours of labour and each Surf King, requires 12 hours. In the Finishing department, each Winner requires 3 hours of labour and each Surf King, 9 hours. Labour in Moulding is paid $4 per hour and in Finishing $5 per hour.

The surfboards are made from fibreglass, studs and cord. The quantities of materials used in making one unit are as follows:

Material

Winner

Surf King

Fibreglass

40 kilos

90 kilos

Studs

10

240

Cord

20 metres

75 metres

Material prices are $3 per kilo for fibreglass, $7.20 per dozen for studs and $0.60 per metre for cording. (Note: 1 dozen = 12 studs).

Other annual costs are as follows:

 

$

$

Indirect wages

 

 

Moulding Dept.

75,000

 

Finishing Dept.

120,000

 

Stores

60,000

 

Canteen

30,000

285,000

 

 

 

Indirect materials

 

 

Moulding Dept.

154,530

 

Finishing Dept.

175,515

 

Stores

4,025

 

Canteen

25,150

359,220

 

 

 

Rent and rates

 

450,000

Depreciation on plant and machinery

 

420,000

Power

 

150,000

Building insurance & heat & light

 

25,500

Advertising

 

280,000

 

 

 

Total

 

1,969,720

 

 

 

The annual quantities sold are 25,000 units of Winner and 15,000 units of Surf King.

Other information is as follows:

Cost Centre

Area (sq. Metres)

Book Value of plant & machinery ($000)

Horsepower of plant & machinery

Direct labour hours

Number of employees

Number of stores notes issued

Moulding Dept.

10,000

1,000

70%

330,000

200

10,000

Finishing Dept.

5,000

200

30%

210,000

150

5,000

Stores

10,000

150

-

-

50

-

Canteen

5,000

50

-

-

25

-

 

 

 

 

 

 

 

Totals

30,000

1,400

100%

540,000

425

15,000

 

 

 

 

 

 

 

Required:

(a)  A production overhead analysis schedule showing the bases of your apportionment. Allocate the costs of the service departments to the production departments.

(b)   Calculate overhead recovery rates for the Moulding and Finishing departments, on the basis of  direct labour hours.

(c)    Calculate the full absorption cost of making one unit of each product

(d)   How many units of each product will have to be sold to break even?


Related Discussions:- Costs of the service departments

Determine the rate of return, A forecasted increase in metal prices has enc...

A forecasted increase in metal prices has encouraged the ABC Resource Company to consider the expansion of the capacity in one of its mine operations in Northern Ontario. For this

What are the variable expenses per unit, Superior Door Company sells pre-hu...

Superior Door Company sells pre-hung doors to home builders. The doors are sold for $60 each. Variable costs are $42 per door and fixed costs total $450,000 per year. The company i

Definitions of manufacturing concepts interstate, Definitions of manufactur...

Definitions of manufacturing concepts  Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended:  Materials and supplies used

Regression Analysis and Cost Estimation, High-Low method of cost estimation...

High-Low method of cost estimation and Number of Photocopies as the cost driver, what would be the resulting cost equation for Maintenance Costs?

Share capital of a company, A company has an authorized share capital of 25...

A company has an authorized share capital of 250 million divided into 1,500,000 ordinary shares of sh.100 each and 1,000,000 preference shares of sh.100 each. 1,000,000 ordinary sh

Exploration costs, are eploration costs of a mining industry regarded as an...

are eploration costs of a mining industry regarded as an asset or expense or both?

Cost of labor, The number of workdays varies from month to month due to the...

The number of workdays varies from month to month due to the number of weekdays, holidays, days of vacation, and sick leave taken in the month. The number of units produced in a mo

Irr, The following data pertains to an investment proposal: Required invest...

The following data pertains to an investment proposal: Required investment $400,000 Annual cost savings $105,700 Projected life of investment 6 years Projected salvage value $0 Req

Calculate the minimum annual sales, a factory operates a small canteen but ...

a factory operates a small canteen but its annual operation has consistently shown a loss:

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd