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CMA 2. Production Overhead A furniture business manufactures quality furniture to customers' orders. It has three production departments and two service departments. Overheads incurred
CMA 2. Production Overhead A furniture business manufactures quality furniture to customers' orders. It has three production departments and two service departments. Overheads incurred for the month just ended are as follows: Allocated overhead Machine insurance Rent and rates Indirect materials Heating and lighting Telephone expenses Depreciation Supervisors' salaries RM 12,400 8,000 21,000 5,000 10,000 2,000 24,000 6,000 88,400 The three production departments, A, B, and C, and the two service departments, X and Y, are housed in the same premises, the details of which, together with other statistics and information, are given below: Departments A B C X Y Floor area occupied (sq. metres) 3,000 1,500 1,500 600 400 Direct labour hours 2,000 1,200 1,800 Labour rates per hour RM4 RM3 RM2 Machine value (RM000) 30 20 10 Value of materials issued (RM000) 100 50 30 Allocated overheads: Specific to each department 2,900 3,000 4,000 1,500 1,000 Service department X's cost apportioned 50% 25% 25% Service department Y's cost apportioned 20% 30% 50% REQUIRED: (a) (b) (c) Prepare a statement showing the overhead cost for each department, showing the basis of apportionment used. Calculate suitable overhead absorption rates using the direct labour hours bases. Two pieces of furniture are made for customers. Direct costs are as follows: Job 123 Job 124 Direct Material RM300 RM200 Direct Labour (hours) : Department A Department B Department C 2220 16 12 10 10 14 Calculate the total cost of each job.
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