Allocation and Apportionment and Job and Batch Costing Solution

Question 5
(a). Total direct cost
Mynor Hanbridge
(2 X 6 X 800) (3 X 5 X 600)
Direct Materials 9 600 9 000
(4 X 9 X 800) (4.5 X 10 X 600)
Direct Labour 28 800 27 000
TOTAL 38 400 36 000

(b).Overheads for 3 months ended 31 March 2015

Total Mynor Hanbridge Sales and
Administration
$ $ $ $
23 600 X (3/12) (3200/5900) X 5 900 (2700/5900) X 5900
Supervisor’s 5 900 3 200 2 700 0
salary
50 000 X (3/12) (2500/5000) X 12500 (2000/5000) X 12500 (500/5000) X 12500
Rent 12 500 6 250 5 000 1 250
(12000/30000) X 6000 (15000/30000) X 6000 (3000/30000) X 6000
Power 6 000 2 400 3 000 600
20% X 9000 X 3/12 20 % X 8000 X 3/12 20 % X 3 000 X 3/12
Depreciation 1 000 450 400 150

Sales and 13 550 0 0 13 550

administration
TOTAL 38 950 12 300 11 100 15 550

Labour hours:
Mynor (800 X 4) 3 200
Hanbridge (600 X 4.5) 2 700
Total hours 5 900

(c). Value of inventory

Mynor Handbridge
$ $
Value per unit 63.38 78.50
(800 – 700) (600 – 400)
Number of units in inventory 100 200
Total value of inventory 6 338 15 700

Total cost Mynor = 38 400 + 12 300 = $50 700

Cost per unit = 50 700 / 800 = $63.38

Total cost Handbridge = 36 000 + 11 100 = $47 100

Cost per unit = 47 100 / 600 = $78.50
(d). Manufacturing Account for the three months ended 31 March 2015
Direct Materials (9 600 + 9 000) 18 600
Direct Labour (28 800 + 27 000) 55 800
Prime Cost 74 400
Add Overheads (12 300 + 11 100) 23 400
Cost of production 97 800

(e). Income Statement for the three months ended 31 March 2015
Revenue (700 X 90) + (400 X 120) 111 000
Less cost of sales
Cost of production 97 800
Less closing inventory (6 338 + 15 700) (22 038) (75 762)
Gross Profit 35 238
Less Expenses
Sales and administration (15 550)
Profit 3 months ended 31 March 2005 19 688