TRl-D has three production departments- Extrusion. Machining and Finishing

- and a service department known as Production Services which works for the production departments in the ratio of 3:2:1.

The following costs and relevant data. which represent normal activity levels.

have been budgeted for the period ending 31 December 1996:

Extrusion Machining Finishing Production Total Services Costs £000 £000 £000 £000 £000 Direct wages 58 72 90 220 Direct materials 40 29 15 84 Indirect wages 15 21 8 58 102 Depreciation 84 Rates 22 Power 180 Personnel 60 Insurance 48 Other data:

Direct labour hours 7.250 9.000 15.000 31.250 Machine hours 15.500 20.000 2.500 2.000 40.000 Floor area (m2 ) 800 1.200 1.000 1.400 4.400 Fixed assets £160,000 £140.000 £30,000 £70,000 £400.000 Employees 40 56 94 50 240 REQUIREMENTS:

(a) Prepare an overhead analysis sheet for TRl-D Ltd for the period ending 31 December 1996.

(10 marks)

(b) Calculate appropriate overhead absorption rates for the Extrusion.

Machining and Finishing Departments.

{c) The following data are available for the actual results of the Extrusion Department for the period ending 31 December 1996:
Actual overheads Actual labour hours Actual machine hours £211.820 7.380 16.250 Calculate the under/over recovery of overheads for the Extrusion Department.
(2 marks)
{Total marks=15)
CIMA, Stage 1, November 1996.

AppendixLO1