Question

The following information for the year 2019 is provided by Tromben Ltd: Question 1 - Identification of types of costs From the information provided, calculate the following costs: $5,200,000 100 000 hours 80 000 hours Total direct costs Total overhead costs Total manufacturing costs Total non-manufacturing costs Total sales revenue Direct labour hours Machine hours Costs: Depreciation: factory equipment Depreciation: factory building Depreciation: administration equipment Direct materials Factory electricity Sales commission (5% sales revenue) Indirect labour Machine and maintenance repairs General administration Direct labour Interest Lubricants and cleaning materials factory Rent marketing and sales office Other miscellaneous production costs Quality control costs Total full costs Labour rate ($/DLH) $280,000 $720,000 $60,000 $500,000 $130,000 $260,000 $300,000 $78,000 $120,000 $2,000,000 $20,000 $10,000 $12,000 $24,000 $30,000 Question 2 - Calculation of OH rates Calculate the total overhead rates using: a) DL hours as the cost driver b) Machine hours as the cost driver a) Rate based on DL hours b) Rate based on machine hours

Answer 1

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Question 1
Direct Cost		Overhead Cost		Non Manufacturing Cost
Direct Material	5,00,000	Depreciation Factory Equipment	2,80,000	Depreciation Admin Equipment	60,000
Direct Labor	20,00,000	Depreciation Factory Building	7,20,000	Sales Commision	2,60,000
		Factory Electricity	1,30,000	General Admin	1,20,000
		Indirect Labor	3,00,000	Interest	20,000
		Machine and Maint Repair	78,000	Rent and Marketing sales office	12,000
		Lubricants and Cleaning	10,000	Quality Control Cost	30,000
		Other Misc Prod Cost	24,000
Total	25,00,000		15,42,000		5,02,000
Total Manufacturing Cost	40,42,000
$2,500,000+$1,542,000
Total Full Cost	45,44,000
Direct+Overhead+Non Manu
Labor Rate:
Direct Labor	20,00,000	a
Direct Labor Hours	1,00,000	b
Labor Rate	20	a/b
Question 2
Overhead Cost	15,42,000	a
Direct Labor Hours	1,00,000	b
Machine Hours	80,000	c
Based on DL hours	15.42	a/b
Based on Machine Hour	19.28	a/c