Why Worry Ltd manufactures a single product which has a standard cost as follows:

                                                                                                GHS

            Materials          (15sqm @ GHS3.00 per unit)             45.00

            Labour             (5hrs @ GHS4.00 per hour)                20.00

            Variable Overheads (5hrs @ GHS2.00 per hour)       10.00

            Fixed Overheads (5hrs @ GHS1.00 per hour)                        5.00

            Total cost per unit                                                       80.00

The monthly budget for the production and sales was 1000 units, to be sold for GHS100.00 each.

The actual results for the month of August 2019 were as follows:

            Production was 1,400units

Sales was 1,200 units @ GHS102 each

            Materials          22,000sqm @ GHS4.00 per sqm       

            Labour             6,800hrs @ GHS5.00 per hour

            Variable overhead was GHS11,000

            Fixed overhead            was GHS 6,000

2,200 toys were produced and 2,100 were sold for GHS13.00 each.

Required

1. Prepare an operating statement reconciling budgeted and actual profits based on full costing method, showing all appropriate variances.

Michichi Auto Repairs has three departments through which all vehicles for repairs pass: Mechanical Shop, Elecitrical & Body Shop, and Painting & Spraying Shop.

The following information is relevant for the year to December 2006.

                                                Wage Rate/Hour         Variable Overhead      Direct Labor Hour

                                                            GHS                            GHS                            GHS

Mechanical Shop                     5.50                             9,000                          10,000

Electrical & Body Shop           4.50                             7,200                          12,000

Painting & Spraying Shop        4.00                             6,300                           7,000

The fixed factory overheads are estimated at GHS6,000.00. It is the policy of the factory to charge for 20% profit mark up on each job.

Information relating to repairs to be carried out on a car with registration number GW244T is as follows:

                                                                        Direct Labour Hours               Cost [GHS]

Materials from store                                                                                120.00

Components to be bought                                                                         60.00

Mechanical Shop                                             60

Electrical & Body Shop                                   80

Painting & Spraying                                         20

Washing and Road Test                                                                             40.00

It is also provided that administration costs are absorbed by adding 10% to the total cost of the costs already given above.

You are required to prepare estimate of the cost of repairs to be carried out on car number GW244T and the amount to paid by the customer after the completion of the repair work.

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