Question
QUESTION 2 (25 marks) Avina Bhd. operates 3 production departments X, Y and Z and two service departments A and B. Allowance is made in
QUESTION 2 (25 marks)
Avina Bhd. operates 3 production departments X, Y and Z and two service departments A and B. Allowance is made in the rates for apportionment of the costs of the two service departments the overhead costs for the year were as follows:
X Y Z A B
Indirect wages RM3,600 6,000 1,800 4,800 2,400
Repairs and maintenance RM960 RM2,160 RM360 RM240 RM120
Indirect material RM1,800 RM2,760 RM1,320 RM1,080 RM1,800
Power RM900
Rent and rates RM9,600
Lighting and heating RM6,000
Depreciation - plant RM12,000
Depreciation - fittings RM300
Insurance - plant RM2,400
Insurance - buildings RM600
The following data is available:
X Y Z A B
Effective horse
power 80 180 30 10 -
Area occupied
(sq. feet) 4,000 8,000 6,000 1,000 1,000
Value of plant
(RM) 12,500 30,000 3,750 3,750 -
Value of
fittings (RM) 2,000 1,000 4,000 2,000 1,000
Direct hours 28,800 41,000 40,400 - -
Labour cost
(RM) 41,000 60,600 48,400 - -
Machine hours 24,000 43,200 4,000 - -
The cost of service departments A and B are allocated to other departments on percentage basis below:
X Y Z A B
A 20 50 20 - 10
B 20 60 10 10 -
During the last financial year the department overhead absorption rates used were:
X 70% on departmental direct labour costs
Y RM1.50 per machine hour
Z RM0.60 per direct labour hour
Required:
(a) Prepare an overhead analysis sheet showing the distribution of overhead to the departments.
(b) Show the over or under absorption of overheads during the year.
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