Question 2 (15 marks) (27 minutes)

Tomboya CC has two production departments (F and G) and two service departments (Canteen and Maintenance). Labour hours are used as an allocation base in the two labour intensive production departments, they total 2000 and 1800 respectively.

Total allocated and apportioned general overheads after the primary allocation for each department are as follows:

F G Canteen Maintenance

N$125 000 N$80 000 N$20 000 N$40 000

Canteen and Maintenance perform services for both production departments and to one another in the following proportions.

F G Canteen Maintenance

% of Canteen 60 25 - 15

% of Maintenance 65 35 10 -

Required:

2.1 What are the overheads allocated to each production department if the secondary allocation is done according to the mathematical method? [9]

2.2 What are the overheads allocated to each production if the secondary allocation is done according to the direct method? [4]

2.3 calculate departmental absorption rates for F and G following the secondary allocation in 2.2 [2]