Question
Question 1 A manufacturer garden huts. The production process is classified into two production departments, Assembly and Joinery. There is only one service department, the
Question 1
A manufacturer garden huts. The production process is classified into two production departments, Assembly and Joinery. There is only one service department, the canteen. The relevant forecast information for the year ahead as follows:
Indirect costs for all three departments in total:
RM
Indirect labour
90,000
Indirect material
81,000
Heating and lighting
25,000
Rent and rates
30,000
Depreciation
56,000
Supervision
45,000
Power
36,000
Total
363,000
You are given the following information:
Total
Assembly
Joinery
Canteen
Floor area, (sq.metres)
50,000
20,000
24,000
6,000
Book Value of machinery
560,000
300,000
240,600
20,000
Number of employees
150
80
60
10
Kilowatt hours of power
18,000
9,000
8,000
1,000
Direct material (RM)
50,000
42,000
Direct labour
RM 300
RM200
RM500
Maintenance hours
8,000
6,000
Labour hours
12,640
8,400
The canteen is used by both production cost centers.
Required:
i) Apportion the above production overhead costs over the assembly, joinery and canteen departments using a suitable method for each department.
ii) Apportion service department costs over production departments.
iii) Calculate the overhead absorption rate, based on labour hours
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Financial And Management Accounting An Introduction
Authors: Pauline Weetman
8th Edition
1292244410, 978-1292244419
