8. AB manufacturing company has two production departments, A and B, and two services departments, P...

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8. AB manufacturing company has two production departments, A and B, and two services departments, P and Q. It has an absorption costing system, and uses the reciprocal methods of service department overhead apportionment. A B P Q Total Direct labour hours 26,000 32,000 GHC GHC GHC GHC GHC Overhead cost 204,000 315,000 150,000 181,000 850,000 Work done by P 60% 30% 10% Work done by Q 10% 70% 20% Overheads are absorbed on a direct labour hour basis for each production cost separately. Required: a. Use the simultaneous equations method to calculate the total overhead costs apportioned to each production cost centre. b. Establish the absorption rate for each production cost centre. (6 Marks) (2 Marks) c. Calculate the full cost of Job 789 if its direct materials cost GHC1,271, direct labour cost for the job total GHC580 and the Job requires 9 hours of labour in department A and 7 hours in department B. (4 Marks) d. Calculate the two selling prices of Job 789 as it is the practice of AB manufacturing company to sell at: i. 40% profit margin, and ii. 50% profit mark up on the job. (2 Marks) (2 Marks) 8. AB manufacturing company has two production departments, A and B, and two services departments, P and Q. It has an absorption costing system, and uses the reciprocal methods of service department overhead apportionment. A B P Q Total Direct labour hours 26,000 32,000 GHC GHC GHC GHC GHC Overhead cost 204,000 315,000 150,000 181,000 850,000 Work done by P 60% 30% 10% Work done by Q 10% 70% 20% Overheads are absorbed on a direct labour hour basis for each production cost separately. Required: a. Use the simultaneous equations method to calculate the total overhead costs apportioned to each production cost centre. b. Establish the absorption rate for each production cost centre. (6 Marks) (2 Marks) c. Calculate the full cost of Job 789 if its direct materials cost GHC1,271, direct labour cost for the job total GHC580 and the Job requires 9 hours of labour in department A and 7 hours in department B. (4 Marks) d. Calculate the two selling prices of Job 789 as it is the practice of AB manufacturing company to sell at: i. 40% profit margin, and ii. 50% profit mark up on the job. (2 Marks) (2 Marks)

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a Using simultaneous equations to calculate overhead costs apportioned to each production cost centr... View the full answer