Question 2

E ltd comprises of three production departments and two service departments.

The following information is provided for E ltd for 2019

Supervisor's salaries Machining 300,000

Assembly 200,000

Finishing 250,000

Canteen 120,000

Maintenance 150,000

EXPENSES

Factory Rent 300,000

Heat and light 200,000

General Repairs 60,000

Machine Depreciation 80,000

Machine insurance 90,000

Business Rates 75,000

Floor space occupied (m2)

Machining 400

Assembly 200

Finishing 200

Canteen 150

Maintenance 50

Value of machinery ('000)

Machining 300

Assembly 400

Finishing 200

Canteen 50

Maintenance 50

The service departments work for the other departments as follows:

Service carried out by:

Canteen

Machining 30%

Assembly 30%

Finishing 40%

Maintenance

Machining 25%

Assembly 50%

Finishing 25%

Required

(a)

Using E ltd overhead analysis sheet for 2019, determine the overhead allocated and apportioned to each of the five departments

(b)

Calculate the total overheads included in the production departments after the reapportionment of the service department using direct method