Intro to MA - WEEK 10 - BLANKET RATES

Intro to MA - Blanket Rates

Week - 10
Tutor: Dr. Linxi Shi
Lecture in Accounting & Finance
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Multiple Select

Which belongs to the prime costs?

• Direct labour costs

• Direct material costs

• Manufacturing Overhead

• Non-manufacturing Overhead

From the question,

The employees that work on the product itself charge £50 per hour for their services - what does it mean?

Manufacturing overheads are charged to the products using direct labour hours - what does it mean?

Non- manufacturing overheads on the basis of sales value - what does it mean?

Multiple Choice

So, the prime costs of product X ?

• 200*200+200*2*50=60,000

• 250*500+250*3*50=162,500

• 40*500+40*6*50=32,000

• I don't know

Match

The prime costs per unit of X, Y, and Z (total prime costs of this kind of products/total units produced)

• Production X

• Production Y

• Production Z

300

650

800

• 300

• 650

• 800

Working results

	Workings	X	Y	Z	Total
Units		200	250	40	490
Direct material	1	£40,000	£125,000	£20,000	£185,000
Direct labour	2	£20,000	£37,500	£12,000	£69,500
Total prime cost	3	£60,000	£162,500	£32,000	£254,500
Prime cost per unit	4	£300	£650	£800

Multiple Select

Which belongs to total costs of production?

• Direct labour

• Direct materials

• Manufacturing Overhead

• Non-manufacturing Overhead

Multiple Choice

What is blanket rates

• A standard overhead rate applied uniformly to all departments regardless of their specific activities.

• A standard overhead rate applied differently to different departments.

• A special rate used for external financial reporting.

• A discounted rate offered to customers for bulk purchases.

Multiple Choice

Please calculate the blanket rate of manufacturing overhead (please note: manufacturing overheads are charged to the products using direct labour hours)

• £215

• £200

• £250

• £150

Match

As we know the blanket rate, please calculate the MOH allocated to Product X, Y, and Z (per unit of products)

• Product X

• Product Y

• Product Z

215*2=430

215*3=645

215*6=1,290

• 215*2=430

• 215*3=645

• 215*6=1,290

Multiple Choice

Please calculate the non-manufacturing overhead (administration and selling costs in this exercise) absorbed rate (please note: non- manufacturing overheads are charged on the basis of sales value. )

• 0.10

• 10

• I don't know

• 100

Match

As we know the absorbed rate of non-manufacturing overhead is 0.10 per 1£ sale value, please calculate how much should be allocated to X, Y, and Z, per unit, respectively.

• X

• Y

• Z

0.1*1,500=150

0.1*2000=200

0.1*5,000=500

• 0.1*1,500=150

• 0.1*2000=200

• 0.1*5,000=500

We got:
Manufacturing overhead per unit:
X: 430
Y: 645
Z: 1,290

We got:
Prime costs for X, Y, and Z:
X: 300
Y: 650
Z: 800

To sum up before going further:

We also got:
Non-manufacturing overhead per unit:
X: 150
Y: 200
Z: 500

So, can you calculate the total costs for X, Y, and Z, per unit?

Open Ended

please tell me the total costs you got for per unit of X, Y, and Z:

Working results

	X	Y	Z
Prime cost plus conversion costs	£730	£1,295	£2,090
Administration costs	£150	£200	£500
Total cost per unit	£880	£1,495	£2,590

Match

Final question to calculate: the profit per unit of X, Y, and Z

• Profit per unit of X

• Profit per unit of Y

• Profit per unit of Z

620

505

2,410

• 620

• 505

• 2,410

Open Ended

Is this costing method reasonable for the different departments? why?