Athena Ltd is an engineering business doing work for its customers to their particular requirements and specifications.
Question:
Required:
(a) Prepare a statement showing the budgeted overheads for next year, analysed between the two cost centres. This should be in the form of three columns: one for the total figure for each type of overhead and one column each for the two cost centres, where each type of overhead is analysed between the two cost centres. Each column should also show the total of overheads for the year.
(b) D erive the appropriate rate for charging the overheads of each cost centre to jobs (that is, a separate rate for each cost centre).
(c) A thena Ltd has been asked by a customer to specify the price that it will charge for a particular job that will, if the job goes ahead, be undertaken early next year. The job is expected to use direct materials costing Athena Ltd £1,200, to need 50 hours of machining time, 10 hours of Machine Department direct labour and 20 hours of Fitting Department direct labour. Athena Ltd charges a profit loading of 20 per cent to the full cost of jobs to determine the selling price.
Show workings to derive the proposed selling price for this job.
Step by Step Answer:
Accounting and Finance An Introduction
ISBN: 978-1292088297
8th edition
Authors: Peter Atrill, Eddie McLaney