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ABC Ltd s production cost center is made up of the Machining department and the Assembly department and their service department is the stores. The
ABC Ltd s production cost center is made up of the Machining department and the Assembly department and their service department is the stores. The following information is provided for the month of June 2023: Manufacturing overheads: Electricity R 60 000 Canteen expenses R 80 000 Insurance on plant and equipment R 600 000 Lighting and heating of building R 400 000 Basis of apportionment for ABC Ltd: Basis MACHINING ASSEMBLY STORES Kilowatt hours 900 1 000 1 100 Floor area 80 000 70 000 50 000 Number of employees 500 300 250 Value of plant machinery R1 250 000 R1 180 000 R950 000 Machine hours 60 000 40 000 Direct labour hours 25 000 30 000 NB: Secondary allocation is done on the basis of machine hours. Overhead absorption rates are done on the basis of direct labour hours. Required:ABC Ltd s production cost center is made up of the Machining department and the Assembly department and their service department is the stores. The following information is provided for the month of June 2023: Manufacturing overheads: Electricity R 60 000 Canteen expenses R 80 000 Insurance on plant and equipment R 600 000 Lighting and heating of building R 400 000 Basis of apportionment for ABC Ltd: Basis MACHINING ASSEMBLY STORES Kilowatt hours 900 1 000 1 100 Floor area 80 000 70 000 50 000 Number of employees 500 300 250 Value of plant machinery R1 250 000 R1 180 000 R950 000 Machine hours 60 000 40 000 Direct labour hours 25 000 30 000 NB: Secondary allocation is done on the basis of machine hours. Overhead absorption rates are done on the basis of direct labour hours. Required:ABC Ltd s production cost center is made up of the Machining department and the Assembly department and their service department is the stores. The following information is provided for the month of June 2023: Manufacturing overheads: Electricity R 60 000 Canteen expenses R 80 000 Insurance on plant and equipment R 600 000 Lighting and heating of building R 400 000 Basis of apportionment for ABC Ltd: Basis MACHINING ASSEMBLY STORES Kilowatt hours 900 1 000 1 100 Floor area 80 000 70 000 50 000 Number of employees 500 300 250 Value of plant machinery R1 250 000 R1 180 000 R950 000 Machine hours 60 000 40 000 Direct labour hours 25 000 30 000 NB: Secondary allocation is done on the basis of machine hours. Overhead absorption rates are done on the basis of direct labour hours. Required:OVERHEAD ITEM TOTAL ALLOCATION BASIS MACHINING ASSEMBLY STORES PRIMARY ALLOCATION ELECTRICITY 60 000 Kilowatt hours 1 2 3 CANTEEN EXPENSES 80 000 No. of employees 4 5 6 INSURANCE ON PLANT AND EQUIPMENT 600 000 Value of plant and equipment 7 8 9 LIGHTING AND HEATING 400 000 Floor area 10 11 12 TOTAL 13 14 15 SECONDARY ALLOCATION MACHINE HOURS 16 17 (18) TOTAL 19 20 21 Overhead rates 22 23
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