Question 2 Denvon (Pty) Ltd is a small manufacturing company in Cape Town that manufactures desks. In the past, the financial director has noticed the following relationship between total overheads incurred and production levels: Level of production 5 000 desks 7 500 desks Average overhead cost per unit R44 R36 At the start of the current year, in accordance with the above relationship, the financial director budgeted to manufacture 6 625 desks (which represents normal capacity). However, at the end of the year financial director noticed that the actual overhead expenditure was R250 000 and the total desks manufactured were actually 7 250. REQUIRED: Calculate the following: 1. The budgeted overhead cost for the current year 2. The under/over recovery on overheads for the current year
Question 2 Denvon (Pty) Ltd is a small manufacturing company in Cape Town that manufactures desks. In the past, the financial director has noticed the following relationship between total overheads incurred and production levels: Level of production 5 000 desks 7 500 desks Average overhead cost per unit R44 R36 At the start of the current year, in accordance with the above relationship, the financial director budgeted to manufacture 6 625 desks (which represents normal capacity). However, at the end of the year financial director noticed that the actual overhead expenditure was R250 000 and the total desks manufactured were actually 7 250. REQUIRED: Calculate the following: 1. The budgeted overhead cost for the current year 2. The under/over recovery on overheads for the current year
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 2
Denvon (Pty) Ltd is a small manufacturing company in Cape Town that
manufactures desks. In the past, the financial director has noticed the following
relationship between total overheads incurred and production levels:
Level of production
5 000 desks
7 500 desks
Average overhead cost
per unit
R44
R36
At the start of the current year, in accordance with the above relationship, the
financial director budgeted to manufacture 6 625 desks (which represents normal
capacity). However, at the end of the year financial director noticed that the actual
overhead expenditure was R250 000 and the total desks manufactured were actually
7 250.
REQUIRED:
Calculate the following:
1. The budgeted overhead cost for the current year
2. The under/over recovery on overheads for the current year
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