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Brown's factory has three production department- Preparation, Assemblyand Finishing with two service departments-Maintenance and Material handling

Accounting Sep 09, 2020

Brown's factory has three production department- Preparation, Assemblyand Finishing with two service departments-Maintenance and Material handling. The budgeted information for the year 2019 is as follows:
DepartmentOverhead cost
Capacity Utilization
Allocated/Apportioned
Preparation$45,000
2000 machine hours
Assembly$24,0006000 man hours
Finishing$21,000
Maintenance$3,000
Material Handling
$2,000
The service department cost should be reapportioned to the production department as follows:
Preparation 
AssemblyFinishingMaintenance50%20%30%Material Handling
40%40%20%
The wages relating to the preparation department are overhead cost. In the Assembly and Finishing department the wage rate is $2.10 per hour. The administration and selling overheads are to be absorbed in the job at 33 1/3 % of production cost. Distribution should be added to each job according to quotes from outside carriage companies.The company wishes to quote for job #2020. The following information is available for job$2020
Direct material                                   $7,320
Time required                                    Preparation 40 machine hours
                                                             Assembly 30 man hours
                                                               Finishing  50 man hours
Special design                                     $5,200
Distribution quote from haulage company    $2,000
Required:
Calculate the total cost and quotation price for job#2020 where a profit margin of 30% on selling price is applied.                             (Total 25 marks)

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