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Under a contract with the provincial government, ChemLabs Inc. analyzes the chemical and bacterial composition of well water in various municipalities in the interior of British Columbia. The contract price is $26.00 per test performed. The normal volume is 10,000 tests per month. Each test requires two testing kits, which have a standard price of $3.60 each. Direct labour to perform the test is 10 minutes at $22.80 per hour. At normal volume, the overhead costs are as follows:Variable overhead costs Indirect labour $16,000 Utilities 2,000 Labour-related costs 13,000 Laboratory maintenance 8,000 $39,000 Fixed overhead costs Depreciation 27,830 Supervisor 29,620 Base utilities 8,180 Insurance 1,700 67,330 Total overhead $106,330Overhead is allocated based on direct labour hours. During May 2012, 8,520 tests were performed. The records show the following actual costs and production data:Activity Actual Cost Number of test kits purchased 19,050 $68,580 Number of test kits used 18,280 Direct labour 1,660 hours 37,210 Total overhead costs Variable 45,080 Fixed 68,150Test kits are kept in inventory at standard cost. At the end of May, no tests were in process.Prepare a flexible overhead budget based on 80% of the normal volume.
Labour Costs and Overhead costs Labour Costs Labour costs can be indirect or direct labour costs. Direct labour cost refers to wages paid to workers who such are directly
Shortflower Ltd currently publishes, prints and distributes a range of catalogues and instruction manuals. The management has now decided to discontinue printing and distribution a
Cost Flow Relationships The following information is available for the first month of operations of Url Inc., a manufacturer of art and craft items: Sales $886,900 Gross profit
Mr. Marley is a wholesaler who buys and sells a wide range of products, one of which is the Laker. Mr. Marley sells 24,000 units of the Laker each year at a unit price $20. Sales o
Variable Overhead Variance This is the dissimilarity between the variable overheads absorbed and the actual variable overheads warned. Therefore it can be described as the und
is sale of salvage from capital project recorded as gain/loss or applied back to project costs
information for the year ended December 31, 2010: Direct labor $16,840 Direct material used 16,300 General and administrative expenses 14,240 Indirect production costs 16,780 Selli
Absorption Costing The process described in this section by that net overheads are absorbed into production naturally enough is identified as absorption costing. The absorpti
Features of Effective Cost Center Framework During the establishing cost centers, an organization must consider the given points as: a) Clear definition about the cost cent
concepts of cost
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