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A factory comprises of three production cost centers and two service cost centers. The factory overhead costs for the year ended 31 December 2022
A factory comprises of three production cost centers and two service cost centers. The factory overhead costs for the year ended 31 December 2022 are detailed below: Allocated Overheads: Indirect Materials and Wages Apportioned Overheads: Insurance-building Insurance-plant and machinery Depreciation-plant Rent and Rates Power Light and Heat $'000 3,220 5'000 60 180 900 300 120 120 2/7 Total Budgeted Overheads 4,900 To facilitate apportionments, the cost accountant has converted appropriate quantitative figures into percentages as follows: Indirect Materials and Wages(5) Book Value of Machines (%) Floor Area (%) Value of Store Issues (%) Power Usage (%) Number of Employees (%) Machine hours(thousands) Labour hours(thousands) Production Dept 1 1,610 35 25 40 40 35 600 hours Production Dept 2 700 45 30 50 45 45 800 hours COST CENTRES Production Dept 3 600 15 20 10 10 20 4450 hours $1: Stores 200 5 15 5 52: Canteen 110 10 3/7 REQUIRED: a) Draw a suitable columnar form and, using appropriate basis, distribute the overhead costs over the cost centers. (10 marks) b) Apportion the accumulated costs of the two service centers over the three production centers, again using suitable bases. (10 marks) c) Calculate an overhead absorption rate for each of the three production cost centers (two decimals) (10 marks)
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