Cowley County Health provides equipment used in surgery. It has three product ranges for usage in the Pre-operating (PRE-OP) room, Operating (OP) room and General care (GC). The budgeted and actual data of each product range for the quarter are displayed below. PRE-OP OP GC Budgeted Direct labour hours 20,000 10,000 65,000 Direct machine hours 20,000 40,000 50,000 Number of units 1,200 1,000 2,500 Actual Up 5% on budgeted Direct labour hours Down 1.25% on Down 3.5% on budgeted budgeted Up 2.50% on budgeted Up 2.50% on budgeted Direct machine hours Down 6.65% on budgeted Up 12% on budgeted Number of units Down 10% on As budgeted budgeted Prime costs $312,500 S620,000 $900,000 The budgeted and actual manufacturing overhead are S2,500,000 and $2,650,000 respectively.
Cowley County Health provides equipment used in surgery. It has three product ranges for usage in the Pre-operating (PRE-OP) room, Operating (OP) room and General care (GC). The budgeted and actual data of each product range for the quarter are displayed below. PRE-OP OP GC Budgeted Direct labour hours 20,000 10,000 65,000 Direct machine hours 20,000 40,000 50,000 Number of units 1,200 1,000 2,500 Actual Up 5% on budgeted Direct labour hours Down 1.25% on Down 3.5% on budgeted budgeted Up 2.50% on budgeted Up 2.50% on budgeted Direct machine hours Down 6.65% on budgeted Up 12% on budgeted Number of units Down 10% on As budgeted budgeted Prime costs $312,500 S620,000 $900,000 The budgeted and actual manufacturing overhead are S2,500,000 and $2,650,000 respectively.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Cowley County Health provides equipment used in surgery. It has three product ranges for
usage in the Pre-operating (PRE-OP) room, Operating (OP) room and General care (GC). The
budgeted and actual data of each product range for the quarter are displayed below.
PRE-OP
OP
GC
Budgeted
Direct labour hours
20,000
10,000
65,000
Direct machine hours
20,000
40,000
50,000
Number of units
1,200
1,000
2,500
Actual
Up 5% on
budgeted
Direct labour hours
Down 1.25% on
Down 3.5% on
budgeted
budgeted
Up 2.50% on
budgeted
Up 2.50% on
budgeted
Direct machine hours
Down 6.65% on
budgeted
Up 12% on
budgeted
Number of units
Down 10% on
As budgeted
budgeted
Prime costs
$312,500
$620,000
$900,000
The budgeted and actual manufacturing overhead are $2,500,000 and $2,650,000 respectively.
Transcribed Image Text:Required1 :
a. Calculate the total costs and unit cost for each product range if Cowley County Hospital
uses the actual costing approach.
b. Calculate the total costs and unit cost for each product range if Cowley County Hospital
uses the normal costing approach.
c. Compare results in (a) and (b), state if overhead is under or over allocated. Discuss which
approach seems to provide the least and the most accurate job cost. Explain the reason for
your answer.
d. Should Cowley County Health choose actual costing or normal costing?
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