ORS Limited has three main departments - Casting, Dressing and Assembly -

and for period 3 has prepared the following production overhead budgets for an output level of 110.000 units:

Department:

Production overheads Expected production hours Casting

£225.000 7.500 Dressing

£175,000 7.000 Assembly

£93.000 6.200 During period 3. actual results were as follows for an output level of 117.500 units:

Department:

Production overheads Production hours REQUIREMENTS:

Casting

£229,317 7.950 Dressing

£182.875 7,820 Assembly

£94,395 6.696

{a) Calculate predetermined departmental overhead absorption rates for period 3.

(3 marks)

{b) Calculate the under/over absorption of overheads for EACH department for period 3 and suggest possible reasons for the value of under/over absorbed overheads you have calculated for the CASTING department.

(7 marks)

{c} Analyse the values of under/over absorbed overheads you have calculated for DRESSING and ASS EM BLY and briefly discuss whether the calculated values assist departmental management with the operations of their departments or in the control of their overheads.

AppendixLO1