Ondunga Ball (Pty) Ltd currently makes use of a direct costing system. The company manufactures and sells
Question:
Ondunga Ball (Pty) Ltd currently makes use of a direct costing system. The company manufactures and sells two types of tennis balls, Donkey and Antelope.
Total budgeted fixed manufacturing overhead costs for June 2020 amounted to N$21 000 using machine hours as a basis (traditional approach).
Donkey | Antelope | |
*Budgeted production volume (tennis balls) | 860 | 1 040 |
*The actual production volume for June 2020 was in line with the budgeted production figures.
STANDARD REQUIREMENTS
The standard requirement per tennis ball are as follows:
Donkey | Antelope | |
Direct material: Rubber (grams) | 49 | 50 |
Direct material: Fabric cover (grams) | 9 | 6 |
Direct labour (minutes) | 18 | 15 |
Overall machine time (minutes) | 30 | 30 |
BUDGETED DATA FOR JUNE 2020
Deuce | Ace | |
Sales volume (number of balls) | 800 | 1 000 |
Selling price per ball (N$) | 40 | 35 |
Direct raw material: Rubber (per gram) | 16c | 16c |
Direct raw material: Fabric cover (per gram) | 8c | 8c |
Direct labour recovery rate (per direct labour) | N$20 | N$20 |
Variable overhead recovery rate (per direct labour) | N$2 | N$2 |
ACTUAL DATA FOR JUNE 2020
Donkey | Antelope | |
Sales volume (number of units) | 860 | 1 040 |
Actual sales | N$33 540 | N$39 520 |
Purchased and used direct raw material: Rubber - 90 kg for N$13 500 |
Purchased and used direct raw material: Fabric cover – 10.8kg for N$7 020 |
Direct labour rate: N$18 per direct labour hour |
Variable overhead rate: N$1.80 per direct labour hour |
Total fixed manufacturing overheads N$25 000 |
JULY 2020 BUDGET
The production manager has the following information available for July 2020:
- The budgeted units to be produced for July 2020 is 930 Donkey tennis balls and 1 260 Antelope tennis balls respectively.
- The required minutes per product in terms of direct labour will remain the same as in June 2020.
- The contribution per Donkey tennis ball will be N$30.36 and the contribution per Antelope tennis ball will be N$27.62.
Required:
If direct labour hours for July 2020 is limited to 550 hours and it is the only expected constraint. Calculate the total labour hours needed to produce Donkey tennis balls for July 2020 in order to maximise contribution for Ondunga Ball (Pty) Ltd.
Note: Workings should be rounded off to 2 decimals, while the final answer rounded off to the whole number.
