COCO Ltd makes specialised office furniture through two departments: Assembly and Finishing. The firm can only...
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COCO Ltd makes specialised office furniture through two departments: Assembly and Finishing. The firm can only handle the production of two sets of furniture within a month. The monthly estimated overheads and labour hours are £36,000 and 2,500 respectively. 1,500 of the labour hours are expected to be spent in Assembly department and the remaining in Finishing. The estimated overhead is £21,000 for Assembly and £15,000 for finishing. During the month of January, the firm received two orders for one customised piece of furniture each. One of the orders is referenced F1 and the other F2. Within tight cost control procedures, COCO Ltd managed to keep the actual incurred overhead costs for both manufacturing departments very close to the expected amounts the difference is very insignificant. Also only 2,400 labour hours are actually spent on these jobs. The 100 hours reduction in labour time are exclusively achieved in Finishing department. 1,100 hours and 600 hours were spent on F1 in Assembly and Finishing respectively. Material costs of £18,000 and £10,000 were recorded for F1 and F2 respectively. In addition, average labour rate is £15 Required: a) Calculate the production cost of F1 and F2 using the Blanket rate and labour hours as overhead allocation basis b) Is there any underapplied or overapplied overhead? By how much if any? c) Calculate the production cost of F1 and F2 using the labour hours in each departmentActivate W as overhead allocation basis. Go to Setting COCO Ltd makes specialised office furniture through two departments: Assembly and Finishing. The firm can only handle the production of two sets of furniture within a month. The monthly estimated overheads and labour hours are £36,000 and 2,500 respectively. 1,500 of the labour hours are expected to be spent in Assembly department and the remaining in Finishing. The estimated overhead is £21,000 for Assembly and £15,000 for finishing. During the month of January, the firm received two orders for one customised piece of furniture each. One of the orders is referenced F1 and the other F2. Within tight cost control procedures, COCO Ltd managed to keep the actual incurred overhead costs for both manufacturing departments very close to the expected amounts the difference is very insignificant. Also only 2,400 labour hours are actually spent on these jobs. The 100 hours reduction in labour time are exclusively achieved in Finishing department. 1,100 hours and 600 hours were spent on F1 in Assembly and Finishing respectively. Material costs of £18,000 and £10,000 were recorded for F1 and F2 respectively. In addition, average labour rate is £15 Required: a) Calculate the production cost of F1 and F2 using the Blanket rate and labour hours as overhead allocation basis b) Is there any underapplied or overapplied overhead? By how much if any? c) Calculate the production cost of F1 and F2 using the labour hours in each departmentActivate W as overhead allocation basis. Go to Setting
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a Calculation of Production Cost using Blanket Rate and Labour Hours as Overhead Allocation Basis First lets calculate the overhead rate per labor hou... View the full answer
Related Book For
Cost Management Measuring Monitoring and Motivating Performance
ISBN: 978-0470769423
2nd edition
Authors: Leslie G. Eldenburg, Susan K. Wolcott
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