Sonja Cc is a small firm that makes outfits for customers tailored for their functions, in May 2021 she has ordered for a bridal party (BP)
The details for the job (BP) are as follow:
Direct materials: 10 units at N$108.
Direct labour: 16 hours for department A
10 hours for department B
14 hours for department C
The labour hours are budgeted at 40, 25 and 30 in departments A, B and C respectively.
The firm expect a profit of 40% on the total cost of BP.
Required:
a)Calculate the predetermined overhead allocation rate (OAR) for each department using labour hours as a base for such allocation.
b)Calculate the cost of a bridal party (BP)
c)Calculate the selling price of the bridal party (BP).
a)Calculate the predetermined overhead allocation rate (OAR) for each department using labour hours as a base for such allocation.
To calculate the overhead allocation rate;
Department A ;
Department B;
Department C;
b)Calculate the cost of a bridal party (BP)
Total variable cost =
=
=
=
+
b)Calculate the cost of a bridal party (BP)
each
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