Question

In: Accounting

The following data are given for product DRIM69 Budgeted output for the year: 9800 units Standard...

The following data are given for product DRIM69

Budgeted output for the year: 9800 units

Standard details for one unit:

Direct materials: 40 square metres at K5.30 per square metre

Direct wages:

Bonding department 48 hours at K12.50 per hour

Finishing department 30 hours at K7.60 per hour

Budgeted costs and hours per annum:

Variable overhead: (K) (hours)

Bonding department 375000 500000

Finishing department 150000 300000

Fixed overhead: (K)

Production 392000

Selling and distribution 196000

Required:

A. Prepare a standard cost sheet for one unit and enter on the standard cost sheet the costs to show sub-totals for:

(a) prime cost [4 Marks]

(b) variable production cost [4 Marks]

(c) total production cost [4 Marks]

(d) total cost [4 Marks]

B. Calculate the selling price per unit allowing for a profit of 15 per cent of the selling price. [5 Marks]

C. Calculate the amount of the profit per unit. [4 Marks]

Expert Solution

Workings

Given data - Budgeted output 9,800units

Direct material for one unit - 40 sq mt; cost = k 5.3 per sq mt

Direct material cost per unit = Material consumed * rate per unit

= 40*5.3 = k 212

Direct wages = Hours per unit * rate per hour

Bonding department = 48*12.5 = k 600

Finishing department = 30*7.6= k 228

Total direct wages = 600 + 228 = k 828

Variable overhead

Rate per hour = Total variable overhead / Total hours

Bonding department = k 375,000 / 500,000 hours = 0.75 k / hour

Finishing department = k150,000 / 300,000 hours = 0.50 k / hour

Variable overhead per unit = Rate per hour * hour per unit

Bonding department =k 0.75 / hour * 48 hours / unit = 36 k/ unit

Finishing department = k 0.50 / hour * 30 hours / unit = 15 k / unit

Total variable overhead per unit = 36 + 15 = 51 k / unit

Fixed costs allocated per unit = Total fixed costs / budgeted output

Production cost = 392,000 / 9,800 units = 40 k / unit

Selling and distribution = k196,000 / 9,800 units = 20 k / unit

Cost sheet

Particulars	k per unit
Direct material	212
Direct wages	828

Prime cost	1040
Variable overhead	51
Variable Production cost	1091

Fixed production cost	40
Total production cost	1,131

Administration	nil
Total Cost of production	1131
Selling and distribution	20
Total cost	1,151
Profit margin (15%)	203
Selling price	1,354

Note :-

Selling price =cost price + profit margin

Selling price = 1151 +0.15sp

1 - 0.15sp = 1151

0.85 sp = 1151

Sp = 1151/0.85

Sp. = 117.67%

Selling price = 1151 × 117.67%

Selling price = 1354

Profit = 1354 - 1151

Profit. = 203

ekkarill92 answered 1 year ago

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