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CoursHeroTranscribedText: (C) Proposal to use applied estimated overhang instead of actual ave-rhea; for casting purposes It has been proposed to the management to use applied estimated factory overhead, instead of the current actual overhead, for costing purposes. The Cost Accountant has recently gone for a course on Accounting for Overhead, and suggested a number of advantages for using pre- determined Factory Overhead application rate for product costing purposes. For a start, the Cost Accountant suggested computing an estimated Factory Overhead Application Rate per quarter to be applied for all months in the quarter. Budgeted data for the fourth quarter is as follows: Dept- l Dept-2 Production overhead costs $352,300 $124,300 Direct labour hours 3,500 2,300 Machine hours I 1,200 2,100 One of the sales orders transacted in November 2030, Order #A1212, incurred the following direct labour and machine hours in the two production departments: _LD t-1 M Direct labour hours 25 28 Machine hours 46 3 Direct labour in both departments is paid at a basic rate of $8.00 per hour. 10% of the direct labour hours in the Dept-2 are overtime hours, paid at l50% of basic rate. As the customer has requested for RTS Limited to rush out the order, the overtime premium will be charged to the customer. Ignore all CPF contributions for application rate computation. The request for Order #A1212 was to make 190 units of a product, with each unit requiring 1.08 kgs of prepared material. Loss on preparation is "3% of unprepared material. The unprepared material costs $2.35 per kg. Based on a mark-up of 40%, the management is wondering what selling price will be set for Order #A1212 if applied factory overhead was used, instead of actual overhead

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