Question 1Jardine LTD is developing factory overhead rales for the coming year. Budgeted overhead cots five factory departments are as following: Cost ($)Cost driveMilling79500Machine hoursFinishing84600Direct labourMaintenance40500Repair hours Factory storeroom52800RequisitionFactory office37800No. of employer Total 295200 Estimated operating statistics for the coming year are departementrepair hoursNo of RequisitionNo. of employermachine hoursdirect labourProduction :Milling500042010750012750Finishing25002408400011250support :Maintenance400802Factory storeroom600402Factory office200402 8700820241150024000 Required:a) Calculate a plant-wide overhead rate based on direct labour hours.b) Calculate departmental overhead rates assuming the support departments’ costs are allocaledusing the direct method. (Use the template provided below) A) TotalMillingFinishingMaintenanceFactory StoreroomFactory OfficeBudgeted Costs Re-allocation: Maintenance Factory storeroom Factory office Total Departmental rate: MillingDepartmental rate: Finishing = Question 2Inspired Ltd manufactures spurs. Organisation policy requires Factory overhead to be applied to theproduction of spurs using a predetermined rate based on budgeted direct labour hours. Budgetedcost of production (for 30,000 units) for the ear to 30 June was: Actual factory overhead incurred in the year to 30 June was $72,000. Actual direct labour hourswere 6,100.Required:a) Calculate the factory overhead application rate (per direct labour hour) for the year.b) Calculate the total amount of factory overhead for the year applied to the production of spurs.c) Analyse under or over-applied overhead into two variances. Your answer must name thetwo variances and indicate whether they are favourable/unfavourable. Question 3Mrs Mac sells burgers and is considering whether to open a new outlet. The burgers have a singleselling price and identical costs, regardless of where they are produced. Organisational policydictates that a new outlet will only be opened if predicted profit is greater than $50.000. The following data is supplied: Variable data per burger: Selling Price $6.00Purchase Costs $3.90Selling & Promotional Costs $0.50Annual Fixed Costs: Rent $60,000 Salaries $160,000 Other $100.000 Required: (Consider each part independently)a) Calculate the annual breakeven point in unit sales.b) Mrs Mac predicts that 220,000 burgers will be sold. Calculate the profit or loss and advise(based on organisational policy) whether the new outlet should be opened.c) Calculate how many burgers must be sold to achieve a target profit before tax of $167,840.d) Calculate how many burgers need to be sold to achieve an after-tax profit of $126,000 if thetax rate is 30%e) If the budget is to sell 300,000 burgers, what is the Margin of Safety (in units) and Margin ofSafety Ratio?f) By investing more capital for equipment, the business would be able to reduce selling costs to$0.40 per unit, with a 15% increase in Other Fixed Costs.i) Calculate the annual new breakeven point in dollar sales is the investment is made.li) Advise Mrs Mac whether she should invest the capital or not, providing the reason for your conclusion g) discuss two assumptions which need to be considered regarding cost volume profit for analysis Question 4When preparing budgets, what are five key principles and practices that should be followed?Provide an explanation of each one. (Note: answers must be paraphrased).
