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Let X be total overhead costs of Boiler House, and Y be total overhead costs of Pump Room X-32,34,000+ 0.2Y Y - 3,00,000+ 0.1% Or,
Let X be total overhead costs of Boiler House, and Y be total overhead costs of Pump Room X-32,34,000+ 0.2Y Y - 3,00,000+ 0.1% Or, X - 32,34,000 + 0.2 x 23,00,000+ 0.12) - 22,34,000 + 260,000+ 0.02 X - 22,94,000/0.98 - 23,00,000 Y = 23,00,000 + 0.1 X 3,00,000) = 33,30,000 Allocation of Overbeads among Production Departments Particulars Production departments Total B Direct overheads 8,00,000 $7,00.000 25,00,000 20,00,000 Boiler House (2:4:3) 60,000 1,20,000 90,000 2,70,000 Pump Room (4:2:2) 1,32,000 66,000 66.000 2,64,000 Total 9,92,000 8,86,000 6,56,000 25,34,000 WORKING NOTES 1. Total expenses of Boiler House 83,00,000 Less share of Pump Room (0.10 x 33,00,000) 30,000 Amount to be apportioned among production departments 2,70,000 2. Total expenses of Pump Room 3,30,000 Less share of Boiler House (0.20 x 13,30,000) 66,000 Amount to be apportioned among production departments 2,64,000 P.10.6 A factory has three production departments (P, P, and P) and two service departments (s, and S.), Budgeted overheads for the next year have been allocated/apportioned by the cost department among the five departments. The secondary distribution of service department overheads is pending and the following details are given to you: Department Overheads apportioned/allocated Estimated level of activity 348,000 500 labour-hours 1,12,000 1.200 machine-hours 52,000 600 labour-hours (Contd.) y46 (Contd.) Apportionment of service department costs S, 16,000 P. (20 per cent), P (40 per cent), P. (20 per cent), S. (20 per cent) S. 24,000 P, (10 per cent), P, (60 per cent), P. (20 per cent). S, (10 per cent) Calculate the overhead rate of each production department after completing the distribution of service department costs
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