Question
Question 1 The following budgeted data is available to allow an estimate to be made of company overhead absorption rates for the forthcoming financial period:
Question 1
The following budgeted data is available to allow an estimate to be made of company overhead absorption rates for the forthcoming financial period:
| Cost | TOTAL | Cutting | Assembly | Stores | Maintenance |
| Machine dep | MVR310,000 | ||||
| Supervisor | MVR196,000 | ||||
| Electricity | MVR246,000 | ||||
| Rent & rates | MVR174,000 | ||||
| TOTAL | MVR926,000 |
| Book value machines | No. Employees | KWs used | Floor area m | |
| Cutting | 180,000 | 96 | 120,000 | 78,000 |
| Assembly | 72,000 | 72 | 160,000 | 36,000 |
| Stores | - | 12 | 45,000 | 24,000 |
| Maintenance | 108,000 | 20 | 75,000 | 12,000 |
Stores provide 75% of its services to Cutting and 25% of its services to Assembly.
Maintenance provides 30% of its services to Cutting and 70% of its services to Assembly.
Required:
Calculate the overhead absorption rates for Cutting and Assembly if: Cutting is machine intensive and is budgeted at 110,000 hours activity; and Assembly is labour intensive and is budgeted at 80,000 hours
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Auditing Today
Authors: Emile Woolf
3rd Edition
013052168X, 9780130521682
