QUESTION $3(20$ MARKS $-36$ MINUTES$)$ REGULAR $2019$

Company A uses a job costing system. It manufactures customized winter outfits made out of karakul wool. It is the company's policy to absorb overhead costs on the basis of direct labour cost. Should any over$/$under applied overhead arise, is adjusted against the cost of goods sold. During the month

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of April $2019,$ Company A received an order from Delta Secondary School to provide them with $160$ winter outfits for their learners of which the information is provided below:

$\backslash$table$[[$Budgeted information:,$],[$Direct labour cost,N $$\frac{15}{?}$ hour$],[$Total overhead costs,N $7,200],[$Total production,$160$ units$],[$Direct labour hours per finished winter outfit,$2$ hours$],[$Direct material per finished winter outfit,$1\mathrm{.}5$ kilograms$]]$

Additional information:

During the month of April $2019,$ a total of $160$ winter outfits were manufactured and delivered at a profit margin of $25\%.$ The production department was so efficient such that they could only spent $75\%$ of the budgeted time per finished winter outfit. Accordingly, a $5\%$ reduction in direct labour cost per hour has been recorded. As for material utilization, the production department has operated exactly as per the budgeted production requirement. Materials are sourced from a local supplier at $N$$$\frac{9\mathrm{.}50}{?}$ kilogram. No further information is required other than what has been provided so far.

$\backslash$table$[[$REQUIRED:$,$MARKS$],[3\mathrm{.}1,$Determine the overhead cost charged to Order No$.005.,5],[3\mathrm{.}2,$Compute the production cost per unit in lieu of the $160$ winter outfits.,$5],[3\mathrm{.}3,$Determine the gross profit$/($loss$)$ derived from the delivery of $160$ winter outfits.,$3],[3\mathrm{.}4,\backslash$table$[[$Suppose the actual overhead cost incurred is N$ $5,000.$ Determine the over$/],[($under$)$ applied overhead and explain how it would have affected the cost of goods$],[$sold$.]],3],[3\mathrm{.}5,$Why do companies estimate overhead costs?,$1],[3\mathrm{.}6,\backslash$table$[[$What is the difference between job costing and process costing? Give one example$],[$for each as a way of substantiating your answer.$]],3],[$TOTAL MARKS FOR QUESTION $3,20$