Question
Maqbool Ltd. produces Cloth Bags in Two Producing Departments (Cutting & Sewing). Its also has two support departments namely Personnel & Maintenance. Budgeted data pertaining
Maqbool Ltd. produces Cloth Bags in Two Producing Departments (Cutting & Sewing).
Its also has two support departments namely Personnel & Maintenance. Budgeted data
pertaining to these departments is as under:
Support Departments Producing Departments
Personnel Power Cutting Sewing
Amount in Pak Rupees
Factory Overhead 235,000 255,000 300,000 450,000
Wages - 150,000 350,000 425,000
Kilo Watt Hours 8,000 - 20,000 50,000
Direct Labor Hours - - 25,000 35,000
Cost of Personnel Department is allocated on the basis of wages while the cost of Power
Department is allocated on the basis of Kilo Watt Hours. 1. Allocate the overhead costs of the support departments to the producing departments
using the reciprocal method. 15
2. Using direct labor hours, compute departmental overhead rates
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