1. Stardust Ltd provided the following extract from its Budget Manufacturing Packing Overhead 8,000 4,000 Machine Hours...
Question:
- 1. Stardust Ltd provided the following extract from its Budget
Manufacturing Packing
Overhead £8,000 £4,000
Machine Hours 750 100
Labour Hours 800 110
What could be an appropriate overhead absorption rate for the Manufacturing department? (Round to nearest 1p)
2. Brown Leaves Ltd lease an office in London. The rent is £20,000 per quarter, and the service charge is £5,000 per quarter. The lease runs until 31st December 2028. On leaving the premises they will need to pay £15,000 dilapidations. In addition, they pay business rates of £20,000 per annum, which are payable only for as long as the office is in use. The lease includes an option to terminate the agreement early 31st December 2024.
Brown Leaves Ltd are relocating to Manchester 1st January 2029 with moving costs of £80,000 expected. They are considering moving to Manchester early, entering into a lease with the exact same terms as the current London office. If they decide to move early, they will relocate 1st January 2024. What are the total relevant costs for this decision to move earlier?
3. Overheads for product New Wood are absorbed at £8 per machine hour. It takes 1 machine hour to make each unit of New Wood and closing inventory levels for the last two months were;
November 50 units
December 60 units
How would the profits for New Wood differ in December if using marginal costing instead vs absorption costing?
4. Brown Leaves Ltd determine their selling prices by estimating all of the costs of production, plus a proportion of overhead, plus their desired profit. What is this an example of?
5. Brown Bag Ltd anticipate the following production costs in production:
Dept One Dept Two
Direct materials £65 £12
Direct labour hours 4 3
Direct labour rate per hour £15.00 £13.00
Production overhead per direct labour hour £8.00 £12.00
Administration and other overhead 20% of full production cost
Profit margin expected is 40%
What should the selling price to the customer be (rounded to the nearest £1)?
Expert Answer:
1 To calculate the overhead absorption rate for the Manufacturing department you need to divide the total overhead cost by the total machine hours In this case the overhead cost for Manufacturing is 8... View the full answer
