Dream Limited is engaged in the production of olive oil. Subtotals of the budgeted overheads for...

 

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Dream Limited is engaged in the production of olive oil. Subtotals of the budgeted overheads for the first six months of the 20X6 financial year (January to June 20X6) revealed the following General factory overhead Variable overhead (R) Fixed overhead (R) Budgeted activity Machine hours Harvesting 2 970 000 500 000 Pressing 5 350 000 1600 000 1 760 000 1 900 000 140 000 112 000 Normal capacity Machine hours 200 000 160 000 General factory variable overheads are apportioned in line with machine hours worked in each department and general factory fixed overhead are apportioned on the basis of the normal machine hour capacity of the two departments. 1. It has been a long-standing company practice to establish selling prices by applying a mark-up on cost of 45%. The direct material content is R20 per unit. Each unit of the product will take three labour hours (five machine hours) in the harvesting department and four labQut hours (six machine hours) in the pressing department. Hourly laboUt rates are R25.00 and R26 respectively 2. The following actual information relates to the 20X5 financial year January-June July-December 20X5 20X5 Fixed selling and administration costs (dependent on the number of units sold) Distribution costs (Fixed and variable) (dependent on number of units sold) Sales units It is expected that the R456 000 R670 000 R1 342 800 40 000 R1 057 100 30 000 Required: Assuming that your calculations are prepared on 1 January 20X6, calculate four different cost-plus prices using four different cost bases which may help with the pricing decision for Dream Limited- (12 marks) Dream Limited is engaged in the production of olive oil. Subtotals of the budgeted overheads for the first six months of the 20X6 financial year (January to June 20X6) revealed the following General factory overhead Variable overhead (R) Fixed overhead (R) Budgeted activity Machine hours Harvesting 2 970 000 500 000 Pressing 5 350 000 1600 000 1 760 000 1 900 000 140 000 112 000 Normal capacity Machine hours 200 000 160 000 General factory variable overheads are apportioned in line with machine hours worked in each department and general factory fixed overhead are apportioned on the basis of the normal machine hour capacity of the two departments. 1. It has been a long-standing company practice to establish selling prices by applying a mark-up on cost of 45%. The direct material content is R20 per unit. Each unit of the product will take three labour hours (five machine hours) in the harvesting department and four labQut hours (six machine hours) in the pressing department. Hourly laboUt rates are R25.00 and R26 respectively 2. The following actual information relates to the 20X5 financial year January-June July-December 20X5 20X5 Fixed selling and administration costs (dependent on the number of units sold) Distribution costs (Fixed and variable) (dependent on number of units sold) Sales units It is expected that the R456 000 R670 000 R1 342 800 40 000 R1 057 100 30 000 Required: Assuming that your calculations are prepared on 1 January 20X6, calculate four different cost-plus prices using four different cost bases which may help with the pricing decision for Dream Limited- (12 marks) Dream Limited is engaged in the production of olive oil. Subtotals of the budgeted overheads for the first six months of the 20X6 financial year (January to June 20X6) revealed the following General factory overhead Variable overhead (R) Fixed overhead (R) Budgeted activity Machine hours Harvesting 2 970 000 500 000 Pressing 5 350 000 1600 000 1 760 000 1 900 000 140 000 112 000 Normal capacity Machine hours 200 000 160 000 General factory variable overheads are apportioned in line with machine hours worked in each department and general factory fixed overhead are apportioned on the basis of the normal machine hour capacity of the two departments. 1. It has been a long-standing company practice to establish selling prices by applying a mark-up on cost of 45%. The direct material content is R20 per unit. Each unit of the product will take three labour hours (five machine hours) in the harvesting department and four labQut hours (six machine hours) in the pressing department. Hourly laboUt rates are R25.00 and R26 respectively 2. The following actual information relates to the 20X5 financial year January-June July-December 20X5 20X5 Fixed selling and administration costs (dependent on the number of units sold) Distribution costs (Fixed and variable) (dependent on number of units sold) Sales units It is expected that the R456 000 R670 000 R1 342 800 40 000 R1 057 100 30 000 Required: Assuming that your calculations are prepared on 1 January 20X6, calculate four different cost-plus prices using four different cost bases which may help with the pricing decision for Dream Limited- (12 marks) Dream Limited is engaged in the production of olive oil. Subtotals of the budgeted overheads for the first six months of the 20X6 financial year (January to June 20X6) revealed the following General factory overhead Variable overhead (R) Fixed overhead (R) Budgeted activity Machine hours Harvesting 2 970 000 500 000 Pressing 5 350 000 1600 000 1 760 000 1 900 000 140 000 112 000 Normal capacity Machine hours 200 000 160 000 General factory variable overheads are apportioned in line with machine hours worked in each department and general factory fixed overhead are apportioned on the basis of the normal machine hour capacity of the two departments. 1. It has been a long-standing company practice to establish selling prices by applying a mark-up on cost of 45%. The direct material content is R20 per unit. Each unit of the product will take three labour hours (five machine hours) in the harvesting department and four labQut hours (six machine hours) in the pressing department. Hourly laboUt rates are R25.00 and R26 respectively 2. The following actual information relates to the 20X5 financial year January-June July-December 20X5 20X5 Fixed selling and administration costs (dependent on the number of units sold) Distribution costs (Fixed and variable) (dependent on number of units sold) Sales units It is expected that the R456 000 R670 000 R1 342 800 40 000 R1 057 100 30 000 Required: Assuming that your calculations are prepared on 1 January 20X6, calculate four different cost-plus prices using four different cost bases which may help with the pricing decision for Dream Limited- (12 marks) Dream Limited is engaged in the production of olive oil. Subtotals of the budgeted overheads for the first six months of the 20X6 financial year (January to June 20X6) revealed the following General factory overhead Variable overhead (R) Fixed overhead (R) Budgeted activity Machine hours Harvesting 2 970 000 500 000 Pressing 5 350 000 1600 000 1 760 000 1 900 000 140 000 112 000 Normal capacity Machine hours 200 000 160 000 General factory variable overheads are apportioned in line with machine hours worked in each department and general factory fixed overhead are apportioned on the basis of the normal machine hour capacity of the two departments. 1. It has been a long-standing company practice to establish selling prices by applying a mark-up on cost of 45%. The direct material content is R20 per unit. Each unit of the product will take three labour hours (five machine hours) in the harvesting department and four labQut hours (six machine hours) in the pressing department. Hourly laboUt rates are R25.00 and R26 respectively 2. The following actual information relates to the 20X5 financial year January-June July-December 20X5 20X5 Fixed selling and administration costs (dependent on the number of units sold) Distribution costs (Fixed and variable) (dependent on number of units sold) Sales units It is expected that the R456 000 R670 000 R1 342 800 40 000 R1 057 100 30 000 Required: Assuming that your calculations are prepared on 1 January 20X6, calculate four different cost-plus prices using four different cost bases which may help with the pricing decision for Dream Limited- (12 marks) Dream Limited is engaged in the production of olive oil. Subtotals of the budgeted overheads for the first six months of the 20X6 financial year (January to June 20X6) revealed the following General factory overhead Variable overhead (R) Fixed overhead (R) Budgeted activity Machine hours Harvesting 2 970 000 500 000 Pressing 5 350 000 1600 000 1 760 000 1 900 000 140 000 112 000 Normal capacity Machine hours 200 000 160 000 General factory variable overheads are apportioned in line with machine hours worked in each department and general factory fixed overhead are apportioned on the basis of the normal machine hour capacity of the two departments. 1. It has been a long-standing company practice to establish selling prices by applying a mark-up on cost of 45%. The direct material content is R20 per unit. Each unit of the product will take three labour hours (five machine hours) in the harvesting department and four labQut hours (six machine hours) in the pressing department. Hourly laboUt rates are R25.00 and R26 respectively 2. The following actual information relates to the 20X5 financial year January-June July-December 20X5 20X5 Fixed selling and administration costs (dependent on the number of units sold) Distribution costs (Fixed and variable) (dependent on number of units sold) Sales units It is expected that the R456 000 R670 000 R1 342 800 40 000 R1 057 100 30 000 Required: Assuming that your calculations are prepared on 1 January 20X6, calculate four different cost-plus prices using four different cost bases which may help with the pricing decision for Dream Limited- (12 marks)