Question 12: You have been asked to suggest a method of deducing the full cost of...

 

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Question 12: You have been asked to suggest a method of deducing the full cost of various production orders of Petra Ltd. This method will be used as a basis for setting prices. The production orders vary greatly in size and nature from one to the next. The following information has been taken from the budget for the forthcoming financial year: Direct labour hours Machine hours Manufacturing costs: Power Direct materials Machine maintenance and repairs Factory heat and light Lubricants and cleaning materials Direct labor Depreciation: Depreciation: machinery Indirect labor All direct labor is paid the same hourly rate. factory buildings Raw materials 100,000 hours 90,000 hours Required: 1. Determine two feasible pre-determined overhead rates for the year. 2. The company received Order 101. The cost sheet for the order are: irect labor hours $ 40,000 $ 200,000 $ 38,000 $ 4,000 $ 6,000 $ 600,000 $ 130,000 $402,000 $100,000 $1,520,000 $5,000 4,000 hours 1,900 hours. Machine hours Determine the cost for Order 101 using each of the rates calculated in (1). Question 12: You have been asked to suggest a method of deducing the full cost of various production orders of Petra Ltd. This method will be used as a basis for setting prices. The production orders vary greatly in size and nature from one to the next. The following information has been taken from the budget for the forthcoming financial year: Direct labour hours Machine hours Manufacturing costs: Power Direct materials Machine maintenance and repairs Factory heat and light Lubricants and cleaning materials Direct labor Depreciation: Depreciation: machinery Indirect labor All direct labor is paid the same hourly rate. factory buildings Raw materials 100,000 hours 90,000 hours Required: 1. Determine two feasible pre-determined overhead rates for the year. 2. The company received Order 101. The cost sheet for the order are: irect labor hours $ 40,000 $ 200,000 $ 38,000 $ 4,000 $ 6,000 $ 600,000 $ 130,000 $402,000 $100,000 $1,520,000 $5,000 4,000 hours 1,900 hours. Machine hours Determine the cost for Order 101 using each of the rates calculated in (1).

Answer rating: 100% (QA)

1 Overhead rate based on DLH Estimated overheadestimated DLH 1520000100... View the full answer