inect labour-hours, Lasser Company produces 10,000 units of product each period. The direct labour wage rate is £6 per hour. Two-and-a-half metres of direct materials go into each unit of product; the material costs £8.60 per metre. The flexible budget used to plan and control manufacturing overhead costs is given below (in condensed form): Direct labour hours Cost formula Overhead costs (per direct labour-hour) 20,000 000'08 £ 57,000 000'ov Variable costs £190 £38,000 000'9L 3 Fixed costs 168,000 000'891 Total overhead cost £206,000 £ 225,000 £244,000 Required 1- Using 30,000 direct labour-hours as the denominator activity, compute the predetermined overhead rate and break it down into variable and fixed elements. 2- Complete the standard cost card below for one unit of product: Direct materials, 2.5 metres at £ 8.60 £ 21.50 Direct labour, ? Variable overhead, ? Fixed overhead, ? Total standard cost per unit Variable overhead per unit /30000 = Fixed overhead per unit = 0000E/ Hours per unit Direct materials Direct labour Yariahle oyerheads

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Operating at a normal level of
units of product each period. The direct labour wage rate is £6 per hour. Two-and-a-half metres
of direct materials go into each unit of product; the material costs £8.60 per metre. The flexible
budget used to plan and control manufacturing overhead costs is given below (in condensed
form):
direct labour-hours, Lasser Company produces 10,000
Direct labour hours
Cost formula
Overhead costs
(per direct labour-hour)
000'0r
000'oɛ
000'or
Variable costs
£38,000
£76,000
Fixed costs
168,000
Total overhead cost
£ 225,000
£ 244,000
Required
1- Using 30,000 direct labour-hours as the denominator activity, compute the
predetermined overhead rate and break it down into variable and fixed elements.
2- Complete the standard cost card below for one unit of product:
Direct materials, 2.5 metres at £ 8.60 £ 21.50
Direct labour, ?
Variable overhead, ?
Fixed overhead, ?
Total standard cost per unit
Variable overhead per unit /30000 D
Fixed overhead per unit
/30000
Hours unit
per
Direct materials
Direct labour
Variable overheads
Fixed overheads
Transcribed Image Text:Operating at a normal level of units of product each period. The direct labour wage rate is £6 per hour. Two-and-a-half metres of direct materials go into each unit of product; the material costs £8.60 per metre. The flexible budget used to plan and control manufacturing overhead costs is given below (in condensed form): direct labour-hours, Lasser Company produces 10,000 Direct labour hours Cost formula Overhead costs (per direct labour-hour) 000'0r 000'oɛ 000'or Variable costs £38,000 £76,000 Fixed costs 168,000 Total overhead cost £ 225,000 £ 244,000 Required 1- Using 30,000 direct labour-hours as the denominator activity, compute the predetermined overhead rate and break it down into variable and fixed elements. 2- Complete the standard cost card below for one unit of product: Direct materials, 2.5 metres at £ 8.60 £ 21.50 Direct labour, ? Variable overhead, ? Fixed overhead, ? Total standard cost per unit Variable overhead per unit /30000 D Fixed overhead per unit /30000 Hours unit per Direct materials Direct labour Variable overheads Fixed overheads
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