Greg Commercial Furnishers (GCF) manufactures multiple products (e.g., various types of office chairs, document holding shelves,...

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Greg Commercial Furnishers (GCF) manufactures multiple products (e.g., various types of office chairs, document holding shelves, monitor stands and tables etc.) and uses a job-costing system with two direct-cost categories (direct materials and direct production labour) for each product and one production overhead cost pool for all products. GCF provides the following budgeted costs information for the whole factory for all jobs: Budget for 2022 $225 000 $170 000 Production overhead costs $476 000 GCF uses budgeted direct labour costs as the basis for allocating its production overhead costs which is ($476 000/$170 000) 280 per cent of direct labour cost. Direct materials costs Direct production labour costs Required: (a) Which of the four criteria for indirect (factory overhead) cost allocation decision recommended in your textbook that you think GCF adopted for using direct labour costs as the basis for allocating its factory overhead costs to various jobs? Explain briefly. (2 marks) (b) It is September 15, 2022, today. A customer wants to buy 500 of GDF's directors' chairs and has requested GCF to quote a price per chair within next 30 minutes. Will it be feasible for the GCF to adopt actual costing for determining costs of its chairs for quoting the price? Explain. (2 marks) (c) The management accountant of GCF quickly collated cost data of making 500 directors' chairs (Job 725). The direct costs data are as follows: Direct materials costs $50 000 $60 000 Direct production labour costs Indirect costs are allocated based on budgeted factory overhead cost allocation rate. Calculate the total cost of job 725 using normal costing. (2 marks) (d) Based on the total production cost of Job 725 calculated in the previous question, what is the cost per chair? (2 marks) (e) GCF uses 'cost-plus' policy for pricing of its products. If the GCF's profit mark-up on cost is 20% then what price per chair should GCF quote to this customer? (Round the price to nearest dollar) (2 marks) Greg Commercial Furnishers (GCF) manufactures multiple products (e.g., various types of office chairs, document holding shelves, monitor stands and tables etc.) and uses a job-costing system with two direct-cost categories (direct materials and direct production labour) for each product and one production overhead cost pool for all products. GCF provides the following budgeted costs information for the whole factory for all jobs: Budget for 2022 $225 000 $170 000 Production overhead costs $476 000 GCF uses budgeted direct labour costs as the basis for allocating its production overhead costs which is ($476 000/$170 000) 280 per cent of direct labour cost. Direct materials costs Direct production labour costs Required: (a) Which of the four criteria for indirect (factory overhead) cost allocation decision recommended in your textbook that you think GCF adopted for using direct labour costs as the basis for allocating its factory overhead costs to various jobs? Explain briefly. (2 marks) (b) It is September 15, 2022, today. A customer wants to buy 500 of GDF's directors' chairs and has requested GCF to quote a price per chair within next 30 minutes. Will it be feasible for the GCF to adopt actual costing for determining costs of its chairs for quoting the price? Explain. (2 marks) (c) The management accountant of GCF quickly collated cost data of making 500 directors' chairs (Job 725). The direct costs data are as follows: Direct materials costs $50 000 $60 000 Direct production labour costs Indirect costs are allocated based on budgeted factory overhead cost allocation rate. Calculate the total cost of job 725 using normal costing. (2 marks) (d) Based on the total production cost of Job 725 calculated in the previous question, what is the cost per chair? (2 marks) (e) GCF uses 'cost-plus' policy for pricing of its products. If the GCF's profit mark-up on cost is 20% then what price per chair should GCF quote to this customer? (Round the price to nearest dollar) (2 marks)

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a GCF has adopted the criterion of causality for indirect cost allocation decision by using direct l... View the full answer