QUESTION TWOMakati Plc makes and sells a number of products. Estimated data for the forthcomingperiod is as follows:i) Product DataProduction/Sales(units)Total direct material costTotal direct labour costProduct A5,000ZMW'0008040Product B10,000ZMW'000300100Other Products40,000ZMW'0002,020660ii) Overhead costs are ZMW1, 500,000 of which 40% is related to the acquisition,storage and use of direct materials and 60% is related to the control and use ofdirect labour.iii) It is current practice in Makati Plc to absorb overhead costs into product units usingoverall companywide percentages on direct material cost and direct labour cost asthe absorption bases.iv) Market prices for products A and B are ZMW 75 and ZMW 95 per unit respectively.Required:Prepare estimated unit product costs for Product A and Product B where overheadcosts are charged to product units using the existing absorption basis as detailedabove. Calculate the contribution for product A and B.

Under Absorption Costing, Product cost is computed by allocating the indirect overheads, on the…

Prepare estimated unit product costs for Product A and Product B where overhead costs are charged to product units using the existing absorption basis as detailed above. Calculate the contribution for product A and B.

Prepare estimated unit product costs for Product A and Product B where overhead costs are charged to product units using the existing absorption basis as detailed above. Calculate the contribution for product A and B.

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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