please Answer 5.2 perform a primary apportionment of production overheards to respective departments vlearly showing the basis ofapportionment. 5.3using the primary apportionment overheads in table 2, and any relevant information from the question including Table1,perform a secondary overhead apportionment of service department overheads to production department using (i)apportioning of basis of apportionment (ii)applicable methods of apportioning service departmental overheads to production department. 5.4Calculate the predetermined overhead rates to be used in each of the three production department. 5.5Determine the sales value of the 1000 suits. 5.6 Assuming that for the year ended 28 february 2019 the actual manufacturing overheads for the sewing department were N$110000,machine hours were 14000 hours and actual direct labour hours were 9000 hours ,calculate the over/under absorption of manufacturing overheads in the sewing department. 5.8Explain how under/over recoveries of overheads arise and why pre-determined overhead rates are used.

Answer question 5.1-5.8

QUESTION 5 (40 MARKS) Bino Ltd produces suits in three separate production departments (viz. Cutting Sewing and Finishing) Production is serviced by three service centres (viz. Material store, Canteen and Maintenance) The Material store cost centres costs are soportioned to other departments using the direct method while the reciprocal method based on simultaneous equations is used to apportion Canteen and Maintenance centres costs. The Maintenance costs are apportioned based on floor area. It is Bino's policy to set selling prices to ensure a profit margin of 30% on sales The company received a new order for 1 000 Suits which will require the following costs Cost Quantity and price Material fabric 1500 metres costing N$20 per metre Direct labour 2 000 hours at a rate of N$30 per hour Administration and selling costs 10% of production costs The following hours will also be needed for the 1 000 suits Cutting Direct Labour Hours 1 000 Machine hours 700 Sewing 300 Finishing 700 200 500 Budgeted expenses and other details for the year ended 28 February 2020 were as follows: Table 1: Budgeted manufacturing costs and overhead allocation bases. Material Total Cutting Sewing Finishing store NS N$ NS NS NS 120 Direct wages NS 000 50 000 30 000 40 000 100 32 000 10 000 15 000 ? Indirect wages (NS) 000 10 000 20 000 20 000 Consumables (N$ 50 000 5000 4000 20 000 Depreciation - Equip (NS) 90 000 ? ? ? Fuel (NS) 30 000 ? ? ? Heat and light (NS) 15 000 ? ? ? Rental and prop. Taxes (NS) 45 000 ? ? 300 100 Equipment Value (NS) 000 000 60 000 100 000 Number of Employees 250 25 100 100 Floor space used im') 30 000 9 000 9 000 8 000 Fuel usage%) 100 301040 20 000 10 000 10 000 10 2000 100 105 1 000 Page 20 of 27 Direct labour hours Machine hours Material issues (%) 100 000 8000 90000 15000 10060 50 000 45000 15 42000 30000 It is company policy to allocate/cabsorb) manufacturing overheads in the outing department based on direct labour hours while the manufacturing overheads in the sewing and finishing departments are allocated absorbed) based on machine hours Required: Using examples that relate to this question, explain the difference between apportionment of overheads and allocation for absorption of overheads Perform a primary apportionment of production Overheads to respective departments clearly showing the basis of apportionment. Answers without bases of apportionment will be regarded as guesswork and will not get any 5.2 mark Now assume that the primary apportionment has been correctly done for you as follows: Table 2. Primary allocation of production overheads Material Total Cutting Sewing Finishing store Canteen Maintenance Total overheads 330 000 72000 63 000 98 000 42000 31500 23 500 Required: Mark Using the primary apportioned overheads in Table 2 and any relevant information from the question including Table 1. perform a secondary overhead 5.3 apportionment of service departmental overheads to production departments 10 using ) appropriate basis of apportionment and applicable methods) of apportioning service departmental overheads to production departments Calculate the predetermined overhead rates to be used in each of the three production departments 5.6 Determine the sales value of the 1 000 Suits ordered Assuming that for the year ended 28 February 2019 the actual manufacturing overheads for the sewing department were N$110 000. actual machine hours were 14 000 hours and actual direct labour hours were 9 000 hours, calculate the over/under absorption of manufacturing overheads in the sewing departments Page 21 of 27 Explain how under/over recoveries of overheads arise and why pre-determined 5.0 overhead rates are used. Total 40 QUESTION 5 (40 MARKS) Bino Ltd produces suits in three separate production departments (viz. Cutting Sewing and Finishing) Production is serviced by three service centres (viz. Material store, Canteen and Maintenance) The Material store cost centres costs are soportioned to other departments using the direct method while the reciprocal method based on simultaneous equations is used to apportion Canteen and Maintenance centres costs. The Maintenance costs are apportioned based on floor area. It is Bino's policy to set selling prices to ensure a profit margin of 30% on sales The company received a new order for 1 000 Suits which will require the following costs Cost Quantity and price Material fabric 1500 metres costing N$20 per metre Direct labour 2 000 hours at a rate of N$30 per hour Administration and selling costs 10% of production costs The following hours will also be needed for the 1 000 suits Cutting Direct Labour Hours 1 000 Machine hours 700 Sewing 300 Finishing 700 200 500 Budgeted expenses and other details for the year ended 28 February 2020 were as follows: Table 1: Budgeted manufacturing costs and overhead allocation bases. Material Total Cutting Sewing Finishing store NS N$ NS NS NS 120 Direct wages NS 000 50 000 30 000 40 000 100 32 000 10 000 15 000 ? Indirect wages (NS) 000 10 000 20 000 20 000 Consumables (N$ 50 000 5000 4000 20 000 Depreciation - Equip (NS) 90 000 ? ? ? Fuel (NS) 30 000 ? ? ? Heat and light (NS) 15 000 ? ? ? Rental and prop. Taxes (NS) 45 000 ? ? 300 100 Equipment Value (NS) 000 000 60 000 100 000 Number of Employees 250 25 100 100 Floor space used im') 30 000 9 000 9 000 8 000 Fuel usage%) 100 301040 20 000 10 000 10 000 10 2000 100 105 1 000 Page 20 of 27 Direct labour hours Machine hours Material issues (%) 100 000 8000 90000 15000 10060 50 000 45000 15 42000 30000 It is company policy to allocate/cabsorb) manufacturing overheads in the outing department based on direct labour hours while the manufacturing overheads in the sewing and finishing departments are allocated absorbed) based on machine hours Required: Using examples that relate to this question, explain the difference between apportionment of overheads and allocation for absorption of overheads Perform a primary apportionment of production Overheads to respective departments clearly showing the basis of apportionment. Answers without bases of apportionment will be regarded as guesswork and will not get any 5.2 mark Now assume that the primary apportionment has been correctly done for you as follows: Table 2. Primary allocation of production overheads Material Total Cutting Sewing Finishing store Canteen Maintenance Total overheads 330 000 72000 63 000 98 000 42000 31500 23 500 Required: Mark Using the primary apportioned overheads in Table 2 and any relevant information from the question including Table 1. perform a secondary overhead 5.3 apportionment of service departmental overheads to production departments 10 using ) appropriate basis of apportionment and applicable methods) of apportioning service departmental overheads to production departments Calculate the predetermined overhead rates to be used in each of the three production departments 5.6 Determine the sales value of the 1 000 Suits ordered Assuming that for the year ended 28 February 2019 the actual manufacturing overheads for the sewing department were N$110 000. actual machine hours were 14 000 hours and actual direct labour hours were 9 000 hours, calculate the over/under absorption of manufacturing overheads in the sewing departments Page 21 of 27 Explain how under/over recoveries of overheads arise and why pre-determined 5.0 overhead rates are used. Total 40