Answer to Question #318240 in Macroeconomics for lydia

Question

Lungameni Enterprises manufactures Product A selling it to local customers at a market up of 25%. They currently absorbs overhead cost on the basis of direct labour hours. Production volume for product A was estimated at 1000 units. Only 80% of production volume was achieved. Standard practice product A require 0.5 hours at an hourly rate of N$8.50. The 80% production volume produced at 45 minutes per unit and hourly rate of N$8.00. Raw materials bought from local supplier at N3.50 per kilogram. Each unit require 1.5 kilograms. Two kilograms was used, monthly manufacturing overhead costs to be absorbed on basis of direct labour cost.

Required:

on the basis of gross / profit / loss do you we agree with Lungameni Enterprise production managers recommmendation. Show all workings.

Answer 1

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