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Management Accounting C

The document provides information about labor costing and overhead costing for Halwings Company Ltd. and its production of products A, B, and C. For labor costing, it gives production data and labor details to calculate the percentage of hours saved to hours taken for each product, as well as the bonus due and gross earnings for the labor group. For overhead costing, it provides the total budgeted overheads and production budget details for products A and B. It then calculates the overhead absorption rate per unit for each product using different allocation methods, including unit method, percentage on material cost, percentage on labor cost, percentage on prime cost, labor hour rate, and machine hour rate.

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Karìũki Wa Mbìgì
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80 views5 pages

Management Accounting C

The document provides information about labor costing and overhead costing for Halwings Company Ltd. and its production of products A, B, and C. For labor costing, it gives production data and labor details to calculate the percentage of hours saved to hours taken for each product, as well as the bonus due and gross earnings for the labor group. For overhead costing, it provides the total budgeted overheads and production budget details for products A and B. It then calculates the overhead absorption rate per unit for each product using different allocation methods, including unit method, percentage on material cost, percentage on labor cost, percentage on prime cost, labor hour rate, and machine hour rate.

Uploaded by

Karìũki Wa Mbìgì
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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BAC 201 – MANAGEMENT ACCOUNTING

CAT 1 (Distance Learning mode of study)

QUESTION 1 (TOPIC: LABOUR COSTING)

Halwings Company Ltd who manufactures and retails products A, B and C employ sixty direct
workers who work under a group of bonus scheme. The company engages three grades of
workers who are paid a bonus of the excess of time allowed over time taken. The bonus paid is
75% of the workers‘ base rate and is shared by the workers in proportion to the time spent on the
work. The following production data has been extracted from the company‘s records for April
2000.

Product Units produced Time allowed per unit


A 320 63
B 640 120
C 1200 100

Grade of worker Number of direct Base rate per hour Hours worked per
workers (sh) worker
1 20 30 30
2 8 27 64
3 32 24 50

Required:

a) Percentage of hours saved to hours taken.

=(Hours worked)/ (Actual number of hours in the pay period)*100

For Product A;

1
Percentage of hours saved to hours taken=

=(30/63)*100

=47.62%

Product B;

Percentage of hours saved to hours taken=

=(64/120)* 100

=53.33%

Product C;

=(50/100)*100

=50%

b) Bonus due to the group.

Product A;

=(Employee's salary)*(Bonus percentage)

(30hours*4weeks)*(75%)

(120)*(0.75)

=$90

Product B;

(27hours*4weeks)*(0.75)

=$81

Product C;

2
(50hours*4weeks)*(0.75)

=(200*0.75)

=$150

c) Gross earnings due to the group.

Gross Earning = Total Revenue – Cost of Goods Sold

Product A;

(20160 - 14440)

=$5720

Product B;

(76800-40960)

=$35840

Product C;

(120000 - 60000)

= $60000

3
QUESTION 2 (TOPIC: OVERHEAD COSTING)

Given: Total budgeted overheads = Shs.240, 000 and the Production budget is given as follows:
Product A B
i) Units 20,000 10,000
ii) Labour hours 20,000 20,000
iii) Labour cost Shs.17,500 Shs.22,500
iv) Machine hours 45,000 15,000
v) Material cost Shs.15,000 Shs.25,000

Required;
The overhead absorption rate per unit of A and B using the following methods:

Unit method

overhead absorption rate= Total budgeted overheads /Units

Of A: =Shs240,000/ 20,000=Shs 12 per unit of B Shs 240,000/ 10,000 = Shs . 24 per unit

b) Percentage on material cost.

overhead absorption rate= Total budgeted overheads / Material costs

Of A: =Shs240,000 / 15,000×100%=1600% Of B: =Shs240,000/25,000×100%=960%

c) Percentage on labour cost.

overhead absorption rate= Total budgeted overheads / Labour costs

Of A: = Shs240,000/17,500×100% =1371.43% Of B: =Shs240,000 / 22,500×100%=1066.67%

4
d) Percentage On prime cost.

overhead absorption rate= Total budgeted overheads / Prime costs

Of A: =Shs240,000/32,500×100%=738.46% Of B: =Shs240,00047,500×100%=505.26%

e) Labour hour rate.

overhead absorption rate= Total budgeted overheads labour / hours

Of A: =Shs240,000/ 20,000= Shs. 12 per unit

Of B: =Shs240,000/20,000= Shs. 12 per unit

f) Machine hour rate.

overhead absorption rate = Total budgeted overheads machine hours\

Of A: =Shs240,000/45,000= Shs. 5.33 per machine hour

Of B =Shs240,000/15,000=Shs. 16 per machine hour

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