Question 1Dunstan Ltd manufactures tents and sleeping bags in three separate production departments. The principalmanufacturing processes consist of cutting material in the pattern cutting room and sewing the material ineither the tent or the sleeping bag departments. For the year to 31 July cost centre expenses and otherrelevant information are budgeted as follows:Cutting Tentsroom(GHS)TotalSleeping RawMaintenance|(GHS) bags|(GHS)| (GHS)(GHS)materialstores(GHS)41200Indirect wagesConsumable materialsPlant depreciationPowerHeat and lightRent and ratesBuilding insuranceFloor area (sq. ft)Estimated power usage (%)Direct labour (hours)Machine usage (hours)Value of raw material issues|(%)1322003590080800640053003120019500410020100230024600| 4500024200500017500250031700138001440013500275001001120008700010080001770002000100007000324800015001000386.57000| 4000045000701515a) Prepare in columnar form a statement calculating the overhead absorption rates for each direct labourhour for each of the three production units. You should use bases of apportionment and absorption whichyou consider most appropriate and the bases should be clearly indicated in your statement.b) Determine the price to be quoted for a customer order using the information below:Direct materialDirect labour25005 hours @ 10GHS per hour10 hours @ 10GHS per hour12 hours @ 10GHS per hourThe company wants to make a profit of 30% on the total product cost.CuttingTentsSleeping bagsc) At the end of the period, actual labour hours worked are as follows:7000hoursCutting room50000hours60000hoursTentsSleeping bagsThe total actual overhead cost incurred was 360,000GHS. Determine the amount of over/ underabsorption of overheads. How will this amount be treated in the statement of profit or loss ofDunstan Itd?

When the predetermined overheads are lower than the actual overheads, then it is known as…

a) Prepare in columnar form a statement calculating the overhead absorption rates for each direct labour hour for each of the three production units. You should use bases of apportionment and absorption which you consider most appropriate and the bases should be clearly indicated in your statement. b) Determine the price to be quoted for a customer order using the information below: Direct material Direct labour 2500 5 hours @ 10GHS per hour 10 hours @ 10GHS per hour 12 hours @ 10GHS per hour The company wants to make a profit of 30% on the total product cost. Cutting Tents Sleeping bags c) At the end of the period, actual labour hours worked are as follows: 7000hours Cutting room Tents 50000hours 60000hours Sleeping bags The total actual overhead cost incurred was 360,000GHS. Determine the amount of over/ under absorption of overheads. How will this amount be treated in the statement of profit or loss of

a) Prepare in columnar form a statement calculating the overhead absorption rates for each direct labour hour for each of the three production units. You should use bases of apportionment and absorption which you consider most appropriate and the bases should be clearly indicated in your statement. b) Determine the price to be quoted for a customer order using the information below: Direct material Direct labour 2500 5 hours @ 10GHS per hour 10 hours @ 10GHS per hour 12 hours @ 10GHS per hour The company wants to make a profit of 30% on the total product cost. Cutting Tents Sleeping bags c) At the end of the period, actual labour hours worked are as follows: 7000hours Cutting room Tents 50000hours 60000hours Sleeping bags The total actual overhead cost incurred was 360,000GHS. Determine the amount of over/ under absorption of overheads. How will this amount be treated in the statement of profit or loss of

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

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