QUESTION $2(10$ Marks$)$

The product design and development team at CGH Manufacturing Enterprises has completed the development of a

prototype of a product to be manufactured during the forthcoming quarter. The prototype passed through the three

production departments $$ A$,$ B$,$ and C$.$ The following budgeted information on the prototype is available:

The following information relates to the prototype:

Direct material requisitioned R$97470\mathrm{.}43$

Direct material returned to store R$1396\mathrm{.}00$

Direct labour recorded against the prototype:

Production department A $146$ hours at R$48\mathrm{.}00$ per hour

Production department B $39$ hours at R$57\mathrm{.}00$ per hour

Production department C $279$ hours at R$61\mathrm{.}00$ per hour

A special machine was hired for the production of the prototype at a cost of R$590\mathrm{.}00.$

Machine hours recorded against the prototype:

Production department A $411$ hours

Production department B $657$ hours

Production department C $502$ hours

Price quoted for the prototype, including delivery R$172000.$

CGH Manufacturing Enterprises absorbs non$-$production overhead using the following pre$-$determined overhead

absorption rates:

Administration and general overhead $10\%$ of production costs

Selling and distribution overhead $12\%$ of selling price

REQUIRED:

The product design and development team is convinced that the manufacturing and non$-$manufacturing costs of the

prototype are unlikely to be significantly different from those of the product. Therefore, present an analysis of the total cost

and profit or loss attributable to a unit of the product.