Question #317010

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).



1
Expert's answer
2022-03-25T15:07:18-0400

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;

OAR=total.overheaddirect.labour.hoursOAR = \frac{ total. overhead}{direct.labour.hours}

Department A ;

250016=192.31\frac{2500}{16}= 192.31

Department B;

200010=200\frac{2000}{10} = 200

Department C;

300014=214.286\frac{3000}{14} = 214.286


b)Calculate the cost of a bridal party (BP)

Total variable cost = 10×108=108010\times108 =1080

=16×40=64016\times40= 640

=10×25=25010\times25=250

=14×30=42014\times30 = 420

=2390=2390 + 7500=98907500=9890


b)Calculate the cost of a bridal party (BP)

140×9890100=13846\frac{140\times 9890}{100}= 13846


each=1384610=1384.6=\frac{13846}{10} = 1384.6


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