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Question 2 (15 Marks) A factory with three departments uses a single production overhead absorption rate, expressed as a percentage of direct wages cost. It has been suggested that departmental overhead absorption rates would result in more accurate job costs. Set out below are budgeted and actual data for the previous period, together with information relating to job no. 650. Direct wages Direct labour hours Machine hours Production overheads Budget: . Department A B N$ 25 000 100 000 25 000 150 000 10 000 50 000 25 000 85 000 40 000 10 000 N$ 120 000 30 000 75 000 225 000 50 000 Total: Actual Department A NS 30 000 80 000 30 000 140 000 12 000 45 000 30 000 87 000 45 000 14 000 - 59 000 N$ 130 000 28 000 80 000 238 000 Total: Page 23 of 27 During this period job no. 650 incurred the actual costs and actual times in the departments as show below: Direct Material N$ Direct wages Machine Direct labour hours NS hours Department 120 40 10 It is company policy that one-third of total cost is added to production cost to arrive at gross profit. Required: Mark 2 2.1 Calculate the predetermined overhead rate (POR) using the current system Using the POR obtained in 1.1 above, calculate the production overheads 2.2 charged to job no 650, and state the production cost and expected gross profit on this job. 2.3 Compute departmental overhead absorption rates, using machine hours as basis for department A, and labour hours as basis for department B and C. 2.4 Use the departmental overhead absorption rates and calculate the production overheads charged to job no. 650. Total Question 3 (35 Marks) Part A (25 Marks) Tugela Manufacturing Company (TMC) manufactures heavy duty machinery according to client

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