Question 3 Barns Ltd. has three production departments: A, B, and C, and two service departments: Stores and Maintenance. The company absorbs its overhead costs on a machine hour basis in depts. A and B, and a labour hour basis in department C. The entity apportions indirect wages using labour hours worked in each department. The company has budgeted its production overhead costs for the forthcoming year as follows: $ Indirect wages 96,000 Depreciation of plant 376,000 Rent 147,000 Power 72,000 Canteen costs 123,000 Plant insurance 117,500 The following information is also available: A B C Stores Main. Labour Hours 9,000 7,000 16,000 4,000 4,000 Plant value $130,000 $70,000 $20,000 $5,000 $10,000 Floor area (sq. 40,000 30,000 20,000 10,000 5,000 m) Machine hours 12,000 15,000 5,000 nil 4,000 Employees 75 60 50 8 12 Stores 10,000 8,000 2,000 nil 2,000 requisitions KWH ('000) 100 60 60 10 10 Required: (a) Prepare an overhead cost analysis for the period concerned, showing clearly the bases of apportionment used. (b) Calculate the overhead absorption rates for each of the three production departments. (Re-apportion the maintenance costs on the basis of machine hours.) (c) Calculate the selling price of a unit of product (to the nearest $) based on the estimates below and using the absorption rates calculated in (b) above. The company requires a profit of 20% of the selling price. Material 40 kilos @ $5 per kilo 10 hours @ $15 per hour 4 hours @ $14 per hour 12 hours $16 per hour 15 Direct Labour A Direct Labour B Direct Labour C Machine hours A Machine hours B 10 Question 4 Jamming Limited has two production departments: Forming and Assembly. The company also has two service departments: Maintenance and Stores. It