Question 2 Mylady Limited has received a request to produce a component called Zeta. The costing...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 2 Mylady Limited has received a request to produce a component called Zeta. The costing department has prepared the following cost estimates relating to the component. Direct materials: Steel Brass fittings Direct labour: Skilled Semi-skilled Overhead Estimating time Admin overhead @ 20% of production cost Profit @ 25% of total cost Selling price Notes 1 2 3 4 5 6 7 8 10m² @ GHS5.00 per m² 25 hours @ GHS8.00 per hour 10 hours @ GHS5.00 per hour 35 hours @ GHS10.00 per hour Note 1 2 3 2 4 5 6 7 8 GHS 50 20 200 50 350 100 770 154 924 231 1.155 The steel is regularly used, and has a current stock value of GHS5.00 per square metre. There are currently 100 square metres in stock. The steel is readily available at a price of GHS5.50 per square metre. The brass fittings would have to be bought specifically for this job: a supplier has quoted the price of GHS20 for the fittings required. The skilled labour is currently employed by the company and paid at a rate of GHS8.00 per hour. If this job were undertaken it would be necessary either to work 25 hours' overtime, which would be paid at time plus one half, OR in order to carry out the work in normal time, reduce production of another product that earns a contribution of GHS13.00 per hour. The semi-skilled labour currently has sufficient paid idle time to be able to complete this work. The overhead absorption rate includes power costs which are directly related to machine usage. If this job were undertaken, it is estimated that the machine time required would be ten hours. The machines incur power costs of GHS0.75 per hour. There are no other overhead costs that can be specifically identified with this job. The cost of the estimating time is that attributed to the four hours taken by the engineers to analyse the drawings and determine the cost estimate given above. It is company policy to add 20% to the production cost as an allowance for administration costs associated with the jobs accepted. This is the standard profit added by your company as part of its pricing policy. Required Prepare on a relevant cost basis, the lowest cost estimate that could be used as the basis for a quotation. Explain briefly your reasons for using EACH of the values in your estimate. Question 2 Mylady Limited has received a request to produce a component called Zeta. The costing department has prepared the following cost estimates relating to the component. Direct materials: Steel Brass fittings Direct labour: Skilled Semi-skilled Overhead Estimating time Admin overhead @ 20% of production cost Profit @ 25% of total cost Selling price Notes 1 2 3 4 5 6 7 8 10m² @ GHS5.00 per m² 25 hours @ GHS8.00 per hour 10 hours @ GHS5.00 per hour 35 hours @ GHS10.00 per hour Note 1 2 3 2 4 5 6 7 8 GHS 50 20 200 50 350 100 770 154 924 231 1.155 The steel is regularly used, and has a current stock value of GHS5.00 per square metre. There are currently 100 square metres in stock. The steel is readily available at a price of GHS5.50 per square metre. The brass fittings would have to be bought specifically for this job: a supplier has quoted the price of GHS20 for the fittings required. The skilled labour is currently employed by the company and paid at a rate of GHS8.00 per hour. If this job were undertaken it would be necessary either to work 25 hours' overtime, which would be paid at time plus one half, OR in order to carry out the work in normal time, reduce production of another product that earns a contribution of GHS13.00 per hour. The semi-skilled labour currently has sufficient paid idle time to be able to complete this work. The overhead absorption rate includes power costs which are directly related to machine usage. If this job were undertaken, it is estimated that the machine time required would be ten hours. The machines incur power costs of GHS0.75 per hour. There are no other overhead costs that can be specifically identified with this job. The cost of the estimating time is that attributed to the four hours taken by the engineers to analyse the drawings and determine the cost estimate given above. It is company policy to add 20% to the production cost as an allowance for administration costs associated with the jobs accepted. This is the standard profit added by your company as part of its pricing policy. Required Prepare on a relevant cost basis, the lowest cost estimate that could be used as the basis for a quotation. Explain briefly your reasons for using EACH of the values in your estimate.
Expert Answer:
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
Students also viewed these accounting questions
-
A 1 defects size B D E 88888888888888888888888888 2 21 3 24 4 16 5 12 6 15 7 5 8 28 9 20 10 31 11 25 12 20 13 24 14 16 15 19 16 10 17 17 18 13 19 22 20 18 21 39 22 30 23 24 24 16 25 19 26 17 27 15...
-
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 A B Total assets Sales Debt-equity ratio Return on equity D $ $ Net income 2,604 5,783 0.75 E 11% F Y3K, Inc., has sales of $5,783, total assets of...
-
Kiddy Company manufactures bicycles. It recently received a request to manufacture 10 units of a mountain bike at a price lower than it normally accepts. Bruce, the sales manager, indicated that if...
-
Cost information for Lake County Library is as follows. In addition to directly traceable costs, the library incurred $24,000 for a building lease. REQUIRED A. Allocate to departments any costs that...
-
What remedies can an employee seek if an employer violates the Family and Medical Leave Act?
-
Alezandray's Interiors, Inc., is a leading international manufacturer and retailer of home furnishings. The following is adapted from Alexander's balance sheet as of September 30, 2014. Dollars are...
-
What is a motion for judgment on the pleadings?
-
The spectral absorptivity ?? and spectral reflectivity p? for a spectrally selective, diffuse material are as shown. (a) Sketch the spectral transmissivity ??. (b) If solar irradiation with GS = 750...
-
Institutional theory suggests that while institutions can influence a firm's strategic decisions and actions, the entry and strategic behavior of a firm, such as a well-resourced multinational...
-
Use the from step b) to compute the monthly excess outperformance (or underperformance in case the number is negative) of Fund X. The formula is: RX - RVG (as a reminder Rx and Rvg are excess returns...
-
Consider the situation shown in Figure 3. A 1000V rms source delivers power to a load. The load consumes 100 kW with a power factor of 25 percent lagging. a) Find the phasor I, assuming that the...
-
What assumptions do we make about the distributions of a and b? Why is this important in constructing confidence intervals?
-
Explain the purpose of constructing confidence intervals for the parameters and .
-
Briefly explain what we mean when we say that and are unbiased. Why is unbiasedness an important property in an estimator?
-
You have been hired as a consultant for AT&T. Formulate a mathematical model that could be used to estimate the demand for telephone service.
-
Explain why we often construct interval estimates of forecasts.
-
Stock A Stock B Share price $18.00 $12.00 Shares Outstanding (millions) 4,000 12,000 Book/Price 0.173 0.866 Monthly returns: February 2018 14% -16% March 2018 20% -16% April 2018 -26% 4% May 2018 -8%...
-
Coastal Refining Company operates a refinery with a distillation capacity of 12,000 barrels per day. As a new member of Coastal's management team, you have been given the task of developing a...
-
Pleasant View Hospital has three service departmentsFood Services, Administrative Services, and X-ray Services. The costs of these departments are allocated by the step-down method, using the...
-
Diewold Company has two departments, Milling and Assembly. The company uses a job-order cost system and computes a predetermined overhead rate in each department. The Milling Department bases its...
-
What is the difference between delivery cycle time and throughput time? What four elements make up throughput time? What elements of throughput time are value-added and what elements are non-value...
-
Following is a probability density curve with the area between 0 and 1 and the area between 1 and 2 indicated. a. What proportion of the population is between 0 and 1? b. What is the probability that...
-
Use Table A.2 to find the area between z = 1.13 and z = 2.02. Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 -0.8 -0.7 .2119 .2090 .2420 2389 -0.6 .2743 .2709 .2676 .2061 .2033 2358 .2327 .2643...
-
Use Table A.2 to find the area to the left of z = 0.25. Z 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 -0.8 -0.7 .2119 .2090 .2420 2389 -0.6 .2743 .2709 .2676 .2061 .2033 2358 .2327 .2643 .2005...
Study smarter with the SolutionInn App