Question 2 (21 marks) Below are the actual overhead and actual activities for the three (3) production departments at Groceries R Us for the year ended August 2021. Indirect Labour Indirect Materials Other Expenses Machine hours Labour hours A $93,750 $31,250 $62,500 6,250 31,250 B $12,500 $18,750 $93.750 12.500 6,250 $18,750 $43,750 $78,125 18,750 15,625 Prior to the end of the period, the production manager provided the following budgeted information for each of the departments. The entity also has two service departments: Stores and Maintenance. The following immediately below are the budgeted data for the same period: Indirect Labour Indirect Materials Other Expenses Labour hours Machine hours $93,750 $18,750 $75,000 37.500 6,250 B $46,875 $15,625 $62,500 5,000 9,375 $78,125 $46,875 $31.250 12,500 15,625 Maintenance $25.000 $37,500 $12,500 Stores $31,250 $43,750 $50,000 Overhead is absorbed based on the intensity of the individual departments. It has been estimated that service department usage is as follows: Maintenance A 30% 45% Maintenance Stores B 40% 30% 25% 15% Stores 5% 10% Required: a) Prepare a schedule to apportion the notional service cost to production and the total overheads for the production departments after apportionment. Hint: use simultaneous equations to derive the notional values. (15 marks) b) Calculate the overhead absorbed in each department. (3 marks) c) Calculate the under/over absorbed overheads for each department. (3 marks) Question 2 (21 marks) Below are the actual overhead and actual activities for the three (3) production departments at Groceries R Us for the year ended August 2021. Indirect Labour Indirect Materials Other Expenses Machine hours Labour hours A $93,750 $31,250 $62,500 6,250 31,250 B $12,500 $18,750 $93.750 12.500 6,250 $18,750 $43,750 $78,125 18,750 15,625 Prior to the end of the period, the production manager provided the following budgeted information for each of the departments. The entity also has two service departments: Stores and Maintenance. The following immediately below are the budgeted data for the same period: Indirect Labour Indirect Materials Other Expenses Labour hours Machine hours $93,750 $18,750 $75,000 37.500 6,250 B $46,875 $15,625 $62,500 5,000 9,375 $78,125 $46,875 $31.250 12,500 15,625 Maintenance $25.000 $37,500 $12,500 Stores $31,250 $43,750 $50,000 Overhead is absorbed based on the intensity of the individual departments. It has been estimated that service department usage is as follows: Maintenance A 30% 45% Maintenance Stores B 40% 30% 25% 15% Stores 5% 10% Required: a) Prepare a schedule to apportion the notional service cost to production and the total overheads for the production departments after apportionment. Hint: use simultaneous equations to derive the notional values. (15 marks) b) Calculate the overhead absorbed in each department. (3 marks) c) Calculate the under/over absorbed overheads for each department
