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Question Metalic produces two metal products known as Classic and Modern. Each product will need to pass processes in three departments Production, Assembly and Finishing
Question Metalic produces two metal products known as Classic and Modern. Each product will need to pass processes in three departments Production, Assembly and Finishing department. There are also two service departments, canteen and maintenance in the factory. During the period just ended, actual overhead costs were as follows: Total Production Machining Finishing Canteen Maintenance 160,000 50,000 45,000 35,000 13,000 17,000 Allocated overhead (RM) Depreciation on equipment (RM) Rent & rates (RM) Electricity (RM) Insurance on equipment (RM) 35,000 18,000 25,000 15,000 Additional information: a) Background of departments Total Production Machining Finishing Canteen Maintenance Cost of equipment(RM) 180,000 44,000 60.000 45,000 11,000 20,000 200 Floor area (Sq metres) 10,000 2,000 2,500 1,800 1,700 2,000 Number of employees 65 60 30 20 25 Machine hours (MH) 30,000 30,000 Direct labour cost (RM) 50,000 20,000 20,000 10,000 b) The service departments overhead cost are re-apportioned as follows: Canteen - Number of employees Maintenance - 40% for Production Dept, 40% for Machining Dept, 20% for Finishing Dept Required: a) List and explain THREE (3) objectives of overhead cost analysis. (9 marks) b) Prepare overhead analysis sheet and calculate the overhead rates assuming Poduction department and Finishing department use percentage of direct labour costs; and Machining Department uses machine hours. (Total: 30 Marks)
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