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Question 5

Ekuvukeni Pty Ltd manufactures lawn-trimming devices. The company uses a departmental overhead recovery rate based on two production departments, assembly (A) and finishing (F), and two servicing departments, maintenance (M) and stores (S). The management accountant estimates the budgeted factory and support overhead costs for the forthcoming financial year as follows:

Canteen expenses	R23 500
Depreciation on machinery	R40 000
Rent for factory building	R24 500

For allocating factory overheads on an equitable basis, the following budgeted information is available.

	Production departments		Service departments
	A	F	M	A
Requisition direct material (R)	25 200	14 800
Estimated machine hours	800	400	-	-
Estimated direct labour hours	2 100	900	-	-
Number of employees	16	12	8	4
Machinery at cost (R)	240 000	80 000	60 000	20 000
Floor space (m2)	1 100	500	100	300

Additional information:

• The maintenance departments costs will be reapportioned based on machine value. Whereas the stores departments cost will be reapportioned based on requisition for direct material
• The maintenance department renders services to all departments, whereas the stores department provides services to the production departments.
• The two service departments are located in the factory building

Required:

Allocate the overheads using the step method by completing the table below:

Select the allocation base from the pick list below:

• No. of employees
• Machinery value
• Floor space
• Direct material

Where the number to insert is zero, please insert "0"

Where the number to insert is negative, please insert the minus symbol "-"

Rounf of to the nearest Rand an do NOT include the currency symbol "R"

		Production department		Service department
	Allocation basis	A	F	M	S	Total
Canteen expenses						R23 500
Depreciation of machinery						R40 000
Rent of factory building						R24 500
Total						R88 000
Secondary allocation
M
S
Total

15 points