Question 3 (June 2013 Normal)

Comptech CC provides four different types of services to small business clients. These services are:

Sales undertaken by the Sales Division

Programming undertaken by the Programming Division

Repairs and Maintenance undertaken by the Maintenance Division

Networks undertaken by the Technical Division

The labour and overhead costs for the company for the year ended 28 February 2013 are expected to be as follows:

Budget for the Year ended 28 February 2013 Notes

Payroll Salaries - Programmers Salaries Sales personnel

Salaries - Technicians 1

Salaries - Supervisors 2 Other Rentals paid

Security costs Electricity costs Insurance of premises

Depreciation 1. Computer Equipment 2. Office Equipment

Sales Programming Maintenance

N$

108 750 70 000 92 750 54 300

110 000 22 000 11 500 27 500 36 875 12 750

546 425

Network

Value of Computer Equipment (N$)

Value of Office Equipment (N$) Floor Area (m2) Electricity usage (Kilowatt hours) Budgeted operated hours

400 000 120 000

30 000 10 000 100 20 280 100

12 000 4 800

40 000

15 000 60 40 3 000

30 000

5 000 40 40 7 600

Note 1: The Technicians are shared between the Maintenance and the budgeted hours for those two divisions. Note 2: Supervisor salaries are apportioned to the other divisions other divisions.

Required:

Technical Divisions in proportion to in proportion to the salaries of the

3.1 Produce an overhead apportionment schedule for the year ended 28 February (16) 2013.

3.2 Calculate an overhead absorption rate for each of the divisions, that is: Sales, Programming, Maintenance, Network

Calculate the overhead absorption rate to four decimal places.