Nomasonto Matifana (NM) Attorneys is a small law firm based in Mnambithi, KwaZulu Natal. The firm has ten (10) partners and ten (10)
support staff. The firm uses a job costing system to accumulate costs chargeable to each client, and it is organised into two
departments: the Research and Documents Department and the Litigation Department. The firm uses predetermined overhead rates to
charge the costs of these departments to its clients.
At the beginning of the current year, MN Attorneys’ management made the following estimates for the year:
Department Research and Litigation
Documents
Research hours 20 000 -
Direct attorney hours 9 000 16 000
Materials and supplies R18 000 R5 000
Direct attorney cost R430 000 R800 000
Departmental overhead cost R700 000 R320 000
The predetermined overhead rate in the Research and Documents Department is based on research hours, and the rate in the litigation
is based on direct attorney costs. The costs charged to each client consist of three (3) elements: materials and supplies used, direct
attorney costs incurred, and the applied amount of overhead from each department where work is performed on the case.
Case 510-7 was initiated on May 10 and completed on July 31. During this period, the following costs and time were recorded on the
case:
Department Research and Litigation
Documents
Research hours 18 -
Direct attorney hours 9 42
Materials and supplies R50 R30
Direct attorney cost R500 R2 500
At the end of the year, the firm’s records revealed the following actual cost and operating data for all cases handled during the year:
Department Research and Documents Litigation
Research hours 23 000 -
Direct attorney hours 8 000 15 000
Materials and supplies R19 000 R6 000
Direct attorney costs R400 000 R725 000
Departmental overhead R700 000 R300 000
costs
Required:
Calculate the following and choose the correct answer from the options provided:
predetermined overhead rate used during the year in the Research and Documents Department R35
predetermined overhead rate used during the year in the Litigation Department 40%
absorbed overhead costs in the Research and Documents Department R800 000
absorbed overhead cost in the Litigation Department R9 000
total cost charged to Case 510-7 in the Research and Documents Department R3 530
total cost charged to Case 510-7 in the Litigation Department R2 500
calculate the amount of over-or-under absorbed in the Research and Documents Department R10 000 under-absorbed
calculate the amount of over-or-under absorbed in the Research and Documents Department R10 000 under-absorbed
PART B
Motlalepula Pty Ltd is a highly automated manufacturing company. At an activity level of 6 000 machine setups, total overhead costs
amounted to R240 000. Of this total amount, depreciation amounts to R80 000 (fixed), and lubrication amounts to R72 000 (all variable).
The remaining R88 000 of the total overhead costs consist of utility costs (mixed). At an activity level of 9 000 setups, utility costs
amount to R112 000.
,Assume the relevant range includes all the activity levels mentioned in this problem.
Required:
Calculate the following and choose the correct answer from the options provided:
Variable cost per setup for utilities R8.00 per setup
Total fixed overhead costs R80 000
If 7 800 setups are projected for the next period, the total expected overhead cost would be R236 000
,Question 1
Teyateyaneng Pty Ltd manufactures a single product. Selected data from the company’s cost
Answer saved
Marked out of records for two recent months are given below:
15.00
Flag Activity levels
question
August September
Cost of goods manufactured R285 000 R390 000
Number of units produced 9 000 12 000
Beginning work in process 14 000 22 000
inventory
Direct materials cost per unit R15 R15
Direct labour cost per unit R6 R6
Manufacturing overhead cost ? ?
Ending work in process inventory 25 000 15 000
The company’s manufacturing overhead costs consist of both fixed and variable elements.
In order to have data available for planning, management wants to determine how much of the
overhead cost is variable with units produced and how much is fixed per year.
Required:
Using the high-low method, calculate the following and choose the correct answer from the
options provided:
the variable cost per unit R35 per unit
the fixed cost element R15 000
use the information provided above to fill in the missing figures by choosing the correct
answers from the options provided.
August September
Direct materials cost
R135 000 R180 000
Direct labour cost
R54 000 R72 000
Manufacturing overhead cost
R96 000 R131 000
Total input costs R296 000 R383 000
Add:
R14 000 R22 000
Beginning work in process
Total manufacturing costs R310 000 R405 000
Less:
R25 000 R15 000
Work process, ending
Cost of goods manufactured R285 000 R390 000
, Next page
Pre vi o us ac t i vi t y
Assessment 6
support staff. The firm uses a job costing system to accumulate costs chargeable to each client, and it is organised into two
departments: the Research and Documents Department and the Litigation Department. The firm uses predetermined overhead rates to
charge the costs of these departments to its clients.
At the beginning of the current year, MN Attorneys’ management made the following estimates for the year:
Department Research and Litigation
Documents
Research hours 20 000 -
Direct attorney hours 9 000 16 000
Materials and supplies R18 000 R5 000
Direct attorney cost R430 000 R800 000
Departmental overhead cost R700 000 R320 000
The predetermined overhead rate in the Research and Documents Department is based on research hours, and the rate in the litigation
is based on direct attorney costs. The costs charged to each client consist of three (3) elements: materials and supplies used, direct
attorney costs incurred, and the applied amount of overhead from each department where work is performed on the case.
Case 510-7 was initiated on May 10 and completed on July 31. During this period, the following costs and time were recorded on the
case:
Department Research and Litigation
Documents
Research hours 18 -
Direct attorney hours 9 42
Materials and supplies R50 R30
Direct attorney cost R500 R2 500
At the end of the year, the firm’s records revealed the following actual cost and operating data for all cases handled during the year:
Department Research and Documents Litigation
Research hours 23 000 -
Direct attorney hours 8 000 15 000
Materials and supplies R19 000 R6 000
Direct attorney costs R400 000 R725 000
Departmental overhead R700 000 R300 000
costs
Required:
Calculate the following and choose the correct answer from the options provided:
predetermined overhead rate used during the year in the Research and Documents Department R35
predetermined overhead rate used during the year in the Litigation Department 40%
absorbed overhead costs in the Research and Documents Department R800 000
absorbed overhead cost in the Litigation Department R9 000
total cost charged to Case 510-7 in the Research and Documents Department R3 530
total cost charged to Case 510-7 in the Litigation Department R2 500
calculate the amount of over-or-under absorbed in the Research and Documents Department R10 000 under-absorbed
calculate the amount of over-or-under absorbed in the Research and Documents Department R10 000 under-absorbed
PART B
Motlalepula Pty Ltd is a highly automated manufacturing company. At an activity level of 6 000 machine setups, total overhead costs
amounted to R240 000. Of this total amount, depreciation amounts to R80 000 (fixed), and lubrication amounts to R72 000 (all variable).
The remaining R88 000 of the total overhead costs consist of utility costs (mixed). At an activity level of 9 000 setups, utility costs
amount to R112 000.
,Assume the relevant range includes all the activity levels mentioned in this problem.
Required:
Calculate the following and choose the correct answer from the options provided:
Variable cost per setup for utilities R8.00 per setup
Total fixed overhead costs R80 000
If 7 800 setups are projected for the next period, the total expected overhead cost would be R236 000
,Question 1
Teyateyaneng Pty Ltd manufactures a single product. Selected data from the company’s cost
Answer saved
Marked out of records for two recent months are given below:
15.00
Flag Activity levels
question
August September
Cost of goods manufactured R285 000 R390 000
Number of units produced 9 000 12 000
Beginning work in process 14 000 22 000
inventory
Direct materials cost per unit R15 R15
Direct labour cost per unit R6 R6
Manufacturing overhead cost ? ?
Ending work in process inventory 25 000 15 000
The company’s manufacturing overhead costs consist of both fixed and variable elements.
In order to have data available for planning, management wants to determine how much of the
overhead cost is variable with units produced and how much is fixed per year.
Required:
Using the high-low method, calculate the following and choose the correct answer from the
options provided:
the variable cost per unit R35 per unit
the fixed cost element R15 000
use the information provided above to fill in the missing figures by choosing the correct
answers from the options provided.
August September
Direct materials cost
R135 000 R180 000
Direct labour cost
R54 000 R72 000
Manufacturing overhead cost
R96 000 R131 000
Total input costs R296 000 R383 000
Add:
R14 000 R22 000
Beginning work in process
Total manufacturing costs R310 000 R405 000
Less:
R25 000 R15 000
Work process, ending
Cost of goods manufactured R285 000 R390 000
, Next page
Pre vi o us ac t i vi t y
Assessment 6
