Question 3 Smart Tools Limited is manufacturing company which uses two production departments (Machining and Finishing) to make its products. It also has two service departments (Canteen and Maintenance). Shown below are next year's budgeted manufacturing overhead costs and certain other additional data: Budgeted overheads Rent and rates 374,000 Insurance and depreciation of equipment 65,600 Heating and light Maintenance department salary 286,000 18,230 Supervisors' salaries 184,500 Total overheads 928,330 Additional data: Machining Finishing Canteen Maintenance Book value of equipment (£) Number of employees 240,000 80,000 20 16 4 Floor area (square meters) 1,820 1,300 1,144 936 Required: You are given the following additional information regarding budgeted production of the three products (A, B, C) made by Smart Tools Limited for the year: Product A Product B Product C Production 3,000 units 2,500 units 1,600 units Direct materials £6 per unit £8 per unit £9 per unit Diretlabour: Machining Department £16 per unit £12 per unit £8 per unit Direct labour: Finishing Department Machine hours per unit £12 per unit £24 per unit £8 per unit 5 hours 4 hours 6 hours All direct labour is paid £8 per hour. All the machine hours take place in the machining department. (c) Calculate the total number of budgeted machine hours to be used during the year to produce the full production of all 3 products and use this, together with relevant information from your answer to part (b), to calculate an overhead absorption rate based on machine hours for the machining department (give your answer to 2 decimal places) (d) Calculate an overhead absorption rate based on direct labour hours for the finishing department (give your answer to 2 decimal places) (e) Using your answer to part (c) and (d) above calculate the budgeted manufacturing overhead cost per unit of Product A (give your answer to 2 decimal places) (f) Calculate the total budgeted manufacturing cost per unit of product A (give your answer to 2 decimal places)
Question 3 Smart Tools Limited is manufacturing company which uses two production departments (Machining and Finishing) to make its products. It also has two service departments (Canteen and Maintenance). Shown below are next year's budgeted manufacturing overhead costs and certain other additional data: Budgeted overheads Rent and rates 374,000 Insurance and depreciation of equipment 65,600 Heating and light Maintenance department salary 286,000 18,230 Supervisors' salaries 184,500 Total overheads 928,330 Additional data: Machining Finishing Canteen Maintenance Book value of equipment (£) Number of employees 240,000 80,000 20 16 4 Floor area (square meters) 1,820 1,300 1,144 936 Required: You are given the following additional information regarding budgeted production of the three products (A, B, C) made by Smart Tools Limited for the year: Product A Product B Product C Production 3,000 units 2,500 units 1,600 units Direct materials £6 per unit £8 per unit £9 per unit Diretlabour: Machining Department £16 per unit £12 per unit £8 per unit Direct labour: Finishing Department Machine hours per unit £12 per unit £24 per unit £8 per unit 5 hours 4 hours 6 hours All direct labour is paid £8 per hour. All the machine hours take place in the machining department. (c) Calculate the total number of budgeted machine hours to be used during the year to produce the full production of all 3 products and use this, together with relevant information from your answer to part (b), to calculate an overhead absorption rate based on machine hours for the machining department (give your answer to 2 decimal places) (d) Calculate an overhead absorption rate based on direct labour hours for the finishing department (give your answer to 2 decimal places) (e) Using your answer to part (c) and (d) above calculate the budgeted manufacturing overhead cost per unit of Product A (give your answer to 2 decimal places) (f) Calculate the total budgeted manufacturing cost per unit of product A (give your answer to 2 decimal places)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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