QUESTION 4 25 MARKS The following information relates to Zimbos Cc a manufacturing company that has two manufacturing departments and two service departments. The company manufactures tables as well as chairs. Manufacturing Dept. 1 (N$) Manufacturing Dept. 2 (N$) Service Dept. 1 (N$) Service Dept. 2 (N$) Total N$ Allocated Overhead 32 400 29 200 12 400 12 850 86 850 General Overheads; Indirect Labour 32 000 Heat & Light 48 600 Repairs & Maintenance 34 700 Canteen Subsidy 5 100 Machine Depreciation 10 400 Machine Insurance 6 250 223 900 Additional information: The following additional information was extracted from the companys management accounting records: Manufacturing Dept. 1 Manufacturing Dept. 2 Service Dept. 1 Service Dept. 2 Floor area sq. m 2 500 4 000 1 000 500 Direct labour hours 30 000 5 000 Indirect labour hours 30 000 5 000 Direct labour rate per hour 12 18 Number of staff 30 5 Machine hours 2 500 25 000 Machine value 40 000 200 000 10 000 Service Dept. overheads are to be re-apportioned as follows:

Page 14 of 14 Service Dept. 1 overheads 20% 80% Service Dept. 2 overheads 50% 50% Data on producing Tables and Chairs by the company is as follows: Table Job Chair Job Direct materials cost Machine hours N$ 240 N$ 420 Machine hours 5 20 Direct labour hours: Manufacturing Dept. 1 40 25 Manufacturing Dept. 2 4 5 REQUIRED: MARKS 4.1 Prepare a statement showing the overhead cost for each department (include the basis of apportionment, where appropriate). 13 4.2 Calculate a suitable overhead absorption rate for each department, using a basis that you deem suitable. 5 4.3 Show the total cost of producing Tables and the total cost of producing Chairs. 7 TOTAL MARKS FOR QUESTION 4 25