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Required: (a) Calculate the predetermined absorption rates for each department. (b) Determine the selling price of the Job #3006.

Required: (a) Calculate the predetermined absorption rates for each department. (b) Determine the selling price of the Job #3006.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Job #3006, which was an order from Sport Equipment, was completed during the period. Additional relevant data relating to the job were as follows: Direct materials: CODE 1 CODE 2 CODE 3 RM600 RM410 RM190 Assembly Finishing Inspection 15 hours at RM20 per hour 40 hours at RM10 per hour 50 hours at RM15 per hour Direct wages: Assembly 20 hours Finishing Inspection 5 hours Machine hours: 10 hours The branding patent was used in making Job #3006 at a cost of RM600. Based on normal activity, the company provides information on budgeted overhead as follows: Departments Budgeted Overhead Budgeted Machine hours Budgeted labour hours Assembly Finishing Inspection RM24,000 RM36,000 RM15,000 3,600 1,800 4,800 2,400 1,000 2,400 It is recommended that the basis of absorption be as follows: - Assembly Inspection Finishing machine hour direct labour hour direct labour hour Administration, selling and distribution expenses are charged to the job at 10% of factory costs. Profit margin is to be maintained at 25% of selling price. Required: Calculate the predetermined absorption rates for each department. (a) (b) Determine the selling price of the Job #3006.
Transcribed Image Text:Job #3006, which was an order from Sport Equipment, was completed during the period. Additional relevant data relating to the job were as follows: Direct materials: CODE 1 CODE 2 CODE 3 RM600 RM410 RM190 Assembly Finishing Inspection 15 hours at RM20 per hour 40 hours at RM10 per hour 50 hours at RM15 per hour Direct wages: Assembly 20 hours Finishing Inspection 5 hours Machine hours: 10 hours The branding patent was used in making Job #3006 at a cost of RM600. Based on normal activity, the company provides information on budgeted overhead as follows: Departments Budgeted Overhead Budgeted Machine hours Budgeted labour hours Assembly Finishing Inspection RM24,000 RM36,000 RM15,000 3,600 1,800 4,800 2,400 1,000 2,400 It is recommended that the basis of absorption be as follows: - Assembly Inspection Finishing machine hour direct labour hour direct labour hour Administration, selling and distribution expenses are charged to the job at 10% of factory costs. Profit margin is to be maintained at 25% of selling price. Required: Calculate the predetermined absorption rates for each department. (a) (b) Determine the selling price of the Job #3006.
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