Calculate the overhead application rate using direct labour hours and direct labour cost as bases.

Hey, good to see you again. The overhead application rate is calculated using the formula: Overhead Application Rate = Budgeted Factory OverheadsBudgeted Activity Base Given budgeted figures: Budgeted Factory Overheads = Kshs 62,000 Budgeted Direct Labour Cost = Kshs 98,000 Budgeted Direct Labour Hours = 155,000 hours Budgeted Machine Hours = 50,000 hours a) Direct labour hours Step 1: Identify the budgeted factory overheads and direct labour hours. Budgeted Factory Overheads = Kshs 62,000 Budgeted Direct Labour Hours = 155,000 hours Step 2: Calculate the overhead application rate. Overhead Application Rate = Kshs 62,000155,000 hours Overhead Application Rate = Kshs 0.40 per direct labour hour The overhead application rate on the basis of direct labour hours is: Kshs 0.40 per direct labour hour b) Direct labour cost Step 1: Identify the budgeted factory overheads and direct labour cost. Budgeted Factory Overheads = Kshs 62,000 Budgeted Direct Labour Cost = Kshs 98,000 Step 2: Calculate the overhead application rate as a percentage of direct labour cost. Overhead Application Rate = Kshs 62,000Kshs 98,000 × 100\% Overhead Application Rate = 0.632653 × 100\% Overhead Application Rate = 63.27\% of direct labour cost (rounded to two decimal places) The overhead application rate on the basis of direct labour cost is: 63.27\% of direct labour cost c) Machine hours Step 1: Identify the budgeted factory overheads and machine hours. Budgeted Factory Overheads = Kshs 62,000 Budgeted Machine Hours = 50,000 hours Step 2: Calculate the overhead application rate. Overhead Application Rate = Kshs 62,00050,000 hours Overhead Application Rate = Kshs 1.24 per machine hour The overhead application rate on the basis of machine hours is: Kshs 1.24 per machine hour d) Overhead costs Step 1: Identify the budgeted factory overheads. Budgeted Factory Overheads = Kshs 62,000 Step 2: Calculate the overhead application rate based on overhead costs. This implies a rate per Kshs of overhead cost. Overhead Application Rate = Kshs 62,000Kshs 62,000 Overhead Application Rate = Kshs 1.00 per Kshs of overhead cost The overhead application rate on the basis of overhead costs is: Kshs 1.00 per Kshs of overhead cost e) Production cost Step 1: Determine the components of budgeted production cost. Budgeted Production Cost = Budgeted Direct Materials + Budgeted Direct Labour + Budgeted Factory Overheads. Step 2: Check for available budgeted figures. Budgeted Direct Labour = Kshs 98,000 Budgeted Factory Overheads = Kshs 62,000 Budgeted Direct Materials cost is not provided in the budget information. Only actual direct material costs are given. Step 3: Conclude on the calculation. Since the budgeted direct materials cost is not provided, the budgeted production cost cannot be determined, and therefore, the overhead application rate on the basis of production cost cannot be calculated. Cannot be calculated due to missing budgeted direct material cost.