Question 3.RQ.5: DC Ltd is an engineering company which uses job costing to a...

DC Ltd is an engineering company which uses job costing to attribute costs to individual products and services provided to its customers. It has commenced the preparation of its fixed production overhead cost budget for year 2 and has identified the following costs:

                                                 £000
Machining                              600
Assembly                                250
Finishing                                150
Stores                                      100
Maintenance                          80
                                              1,180

The stores and maintenance departments are production service departments. An analysis of the services they provide indicates that their costs should be apportioned as follows:

                      Machining      Assembly   Finishing      Stores    Maintenance
Stores                 40%               30%            20%             –                 10%
Maintenance     55%               20%           20%            5%                    –

Requirements

(a) After the apportionment of the service department costs, the total overheads of the production departments will be (to the nearest £500):
Machining            £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ \ }
Assembly             £  \boxed{ \ \ \ \ \ \ \ \ \ \ \ \ }
Finishing             £  \boxed{ \ \ \ \ \ \ \ \ \ \ \ \ }

(b) DC Ltd’s overhead absorption rates for year 1 are as follows:

Machining                  £13.83 per machine hour
Assembly                    £9.98 per labour hour
Finishing                    £9.45 per labour hour

Job no. XX34 is to be started and completed in year 1. Data for the job is as follows:

Direct materials cost            £2, 400
Direct labour cost                 £1, 500

Machine hours and labour hours required for the job are:

                                                           Machine hours              Labour hours
Machining department                        45                                        10
Assembly department                           5                                          15
Finishing department                           4                                          12

DC Ltd adds 10 per cent to total production cost in order to absorb non-production overhead costs, and profit is calculated as 20 per cent of selling price.

Requirement
Complete the following statements (to the nearest penny):

(i) The total production overhead cost of job no. XX34 is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ \ }

(ii) The total production cost of job no. XX34 is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ \ }

(iii) The selling price of job no. XX34 is £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ \ }