Omega Company manufactures a single product. They have two production and two service departments. The following information is provided.

 

                               Production department                                        Service department

                              Machining     Assembly                                     Maintenance     Canteen

Overheads                 $143,500        $154,700                                     $165,800            $176,900

Direct Machine hours    18,845             14,050                                           0                           0

Direct Labor hours          6,065             20,350                                           0                           0

 

The service department overhead is apportioned to the production department on following basis.

 

                                                Machining                  Assembly                  Canteen

Maintenance                               60%                            30%                            10%

Canteen                                       40%                            60%

 

Required:

1. Prepare overhead absorption table showing the reapportionment of service department costs. 
2. Based on apportionment calculate overhead rate for each production department. 
3. Calculate per unit cost for the single product if material cost is 3 meters @ $4 per meter and labor is 7 hours @$8 per hour. For machining department overhead is 3 hours and for assembly department it is 4 hours. 
4. Determine the selling price of the product if the above cost per unit is 100% plus 25% is markup.  

Answer rating: 100% (QA)

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