Question
Azu Company Limited is divided into four (4) cost centers. That is A, B, as production departments and Human Resource & Repairs as service departments
Azu Company Limited is divided into four (4) cost centers.
That is A, B, as production departments and Human Resource & Repairs as service departments The actual cost of a period is as follows
A B HR Repairs
GHS GHS GHS GHS
Indirect materials 35 150 - 25
Maintenance wages 160 250 300 325
Other overheads as follows:
GHS
Supervision 1500
Power 1800
Rent 300
Repairs of plants 1200
Depreciation of plants 850
Depreciation of building 720
The following information is available in respect of the departments:
A B HR Repairs
Area occupied in square feet 1500 1100 900 500
Number of employees 20 15 10 5
Value of plant GHS 6000 4500 3000 1500
HZ Power 10000 9000 6000 5000
Required
- Prepare an overhead analysis sheet by the most reasonable approach and estimate the overhead cost incurred in each cost center
- Department A & B are production departments whereas HR & Repairs are there to service these production departments. Assume these two service departments do not render any service to each other. Using equitable and fair as appropriate as possible re-apportion the HR & Repairs overheads to the production departments
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