Lori LTD uses a job costing system. The normal capacity is 5 000 labour hours per month
Question:
Lori LTD uses a job costing system. The normal capacity is 5 000 labour hours per month and the budgeted manufacturing overheads are R175 000 per month. Overheads are allocated on the basis of labour hours. On 1 July 19.9 an order was received (Job 103) to manufacture 250 cars. The costing section carried out the following calculation of the estimated direct cost of completing this job:
• Material per car R131,50
• Labour per car 7,5 hours @ R15 per hour.
The following relevant actual information is available for July 19.9: 1. All the material for Job 103 was issued @ R140,00 per car, but only 200 cars were manufactured and completed.
2. In the course of the month 5 600 labour hours were worked at R16,00 per hour. A total of 1600 hours were worked on Job 103 in order to complete the 200 cars.
3. Manufacturing overheads for the month amounted to R192 000,00
REQUIRED:
a) Calculate the estimated total cost for Job 103 at 1 July 19.9.
b) Calculate the total cost for Job 103 at 31 July 19.9.
c) Calculate the total over or underapplied manufacturing overheads.