INSTRUCTIONS: Answer ALL the following questions. ☐ Eastern Enterprises has three departments; Welding, Assembly and Spraying. Welding calculates its predetermined overhead absorption rate based on machine hours; Assembly is based on direct labour hours while Spraying is based on direct labour cost. On 2021 January 01, the company had the following estimates: WELDING ASSEMBLY SPRAYING Production overhead costs $720 000 $700 000 $412 500 Direct labour cost $35.000 $120 000 $150 000 Machine hours 36 000 2 500 5.000 Direct labour hours 4.000 20 000 8.000 The labour rate is $150 per hour for all departments. Job 303A which was started and completed during the year showed the following: WELDING ASSEMBLY SPRAYING Direct material Direct labour hours Machine hours $5.500 80 800 $7 200 $9 500 150 100 100 50 Rental of equipment for job 303A will amount to $35 275. Additional Information: Eastern Enterprises recovers selling, distribution and administrative overheads at a rate of 20% of production costs and profit is based on a margin of 20%. A. Compute overhead absorption rates for each department. B. Calculate the cost of Job 303A, clearly showing expected profit and selling price.
INSTRUCTIONS: Answer ALL the following questions. ☐ Eastern Enterprises has three departments; Welding, Assembly and Spraying. Welding calculates its predetermined overhead absorption rate based on machine hours; Assembly is based on direct labour hours while Spraying is based on direct labour cost. On 2021 January 01, the company had the following estimates: WELDING ASSEMBLY SPRAYING Production overhead costs $720 000 $700 000 $412 500 Direct labour cost $35.000 $120 000 $150 000 Machine hours 36 000 2 500 5.000 Direct labour hours 4.000 20 000 8.000 The labour rate is $150 per hour for all departments. Job 303A which was started and completed during the year showed the following: WELDING ASSEMBLY SPRAYING Direct material Direct labour hours Machine hours $5.500 80 800 $7 200 $9 500 150 100 100 50 Rental of equipment for job 303A will amount to $35 275. Additional Information: Eastern Enterprises recovers selling, distribution and administrative overheads at a rate of 20% of production costs and profit is based on a margin of 20%. A. Compute overhead absorption rates for each department. B. Calculate the cost of Job 303A, clearly showing expected profit and selling price.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:INSTRUCTIONS: Answer ALL the following questions.
☐
Eastern Enterprises has three departments; Welding,
Assembly and Spraying. Welding calculates its predetermined
overhead absorption rate based on machine hours; Assembly is
based on direct labour hours while Spraying is based on direct
labour cost. On 2021 January 01, the company had the
following estimates:
WELDING
ASSEMBLY
SPRAYING
Production overhead costs
$720 000
$700 000
$412 500
Direct labour cost
$35.000
$120 000
$150 000
Machine hours
36 000
2 500
5.000
Direct labour hours
4.000
20 000
8.000
The labour rate is $150 per hour for all departments.
Job 303A which was started and completed during the year
showed the following:
WELDING ASSEMBLY SPRAYING
Direct material
Direct labour hours
Machine hours
$5.500
80
800
$7 200
$9 500
150
100
100
50
Rental of equipment for job 303A will amount to $35 275.
Additional Information:
Eastern Enterprises recovers selling, distribution and
administrative overheads at a rate of 20% of production costs
and profit is based on a margin of 20%.
A. Compute overhead absorption rates for each department.
B. Calculate the cost of Job 303A, clearly showing expected
profit and selling price.
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