Dataline Limited operates a computer bureau and provides four types ofservices to small business clients. The services
Question:
Dataline Limited operates a computer bureau and provides four types ofservices to small business clients.
The services are;
- Data processing undertaken by the Data Input Department.
- Designing programs undertaken by the Programming Department.
- Supply of computer systems undertaken by the Installation Department.
- Maintenance and repair of computer systems undertaken by the Maintenance Department.
The labour and overhead eosts for the company for the year to 31 December 2000 are expected to be as follows:
(#) Installation Engineers’ salaries are shared between the Maintenance Department and the Installation Department in proportion to the budgeted hours for those departments.
(*) Management salaries are apportioned to the other departments in proportion to the salaries ofthe other departments The following information is also available:
Required:
(a) Produce an overhead apportionment schedule for the year to 31 December 2000. (14 marks)
(b) Calculate separately an overhead absorption rate for:
(i) the Programming Department (2 marks)
(ii) the Maintenance Department (2 marks)
(iii) the Data Input Department, and (2 marks)
(iv) the Installation Department. (2 marks)
Calculation of overhead absorption rates should be tofour decimal places.
(c) Assuming that the following hours were actually worked during the year ended 31 December 2000, and the following costs were actually incurred, calculate separately the amount of overhead over-absorbed or under-absorbed in each department.
(d) Describe the book-keeping treatment of both over-absorbed and under-absorbed overhead in the cost accounting ledger. (2 marks)
(e) Activity-based costing is an alternative approach to finding the overhead cost per unit in absorption costing. Give two examples of cost drivers that could be used in activity-based costing and their associated costs.
Step by Step Answer:
Management And Cost Accounting
ISBN: 9780273687511
3rd Edition
Authors: Charles T. Horngren, George Foster, Srikant M. Datar