Question 1 : Function-based costing JIM Ltd has identified the following overhead costs and cost drivers for next year Expenses/cost Selling cost Administration Cost Manufacturing overhead cost Utilities cost [store] Cost Driver Direct Labour Hours Machine Hours Expected (cost) $ 75,000 45,000 38,000 12,000 El actual transactions) 4000 25,000 The following is the cost of 2 products made by the company : Direct materials Direct Labor Hour Rate Units completed DLH (hours) Machine hours Product X $4200 $39.50 450 560 60 Product Y $1600 $24.50 100 420 40 REQUIRED Y? 1. Calculate the Predetermined Rate [PR] for product X using machine hours and product Y using direct labour hours 2. What is the applied cost assigned to product X and product 3. Calculate the total product cost using FBC for both products 4. Calculate the unit cost for each product 5. Is the applied cost for each product under or over-applied? 6. What are the disadvantages of FBC and what solution has been offered as alternative? [40 marks) Question 1 : Function-based costing JIM Ltd has identified the following overhead costs and cost drivers for next year Expenses/cost Selling cost Administration Cost Manufacturing overhead cost Utilities cost [store] Cost Driver Direct Labour Hours Machine Hours Expected (cost) $ 75,000 45,000 38,000 12,000 El actual transactions) 4000 25,000 The following is the cost of 2 products made by the company : Direct materials Direct Labor Hour Rate Units completed DLH (hours) Machine hours Product X $4200 $39.50 450 560 60 Product Y $1600 $24.50 100 420 40 REQUIRED Y? 1. Calculate the Predetermined Rate [PR] for product X using machine hours and product Y using direct labour hours 2. What is the applied cost assigned to product X and product 3. Calculate the total product cost using FBC for both products 4. Calculate the unit cost for each product 5. Is the applied cost for each product under or over-applied? 6. What are the disadvantages of FBC and what solution has been offered as alternative? [40 marks)