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Short Answer Question 3 - Overhead Allocation (10 marks) Answer the questions in the space below where Required Service Departments Serv1 Serv2 Producing Departments Beer-Making
Short Answer Question 3 - Overhead Allocation (10 marks) Answer the questions in the space below where Required Service Departments Serv1 Serv2 Producing Departments Beer-Making Wine-Making 15 16 105 ACTUAL Employees Machine hours IT assets Floor space (sqm) Department overhead Direct labour cost Direct material Number of units of product 1,050 200 2,050 300 15 3,550 3,050 400 30,050 27,050 10,050 100,050 7,050 4,050 500 40,050 57,050 20,050 200,050 10 11 BUDGET Employees Machine hours IT assets Floor space (sqm) Department overhead Direct labour cost Direct material Number of units of product Allocation Base 1,000 200 30,000 2,000 300 10,000 300 3,180 3,000 500 30,000 45,729 10,000 100,000 742 7,000 4,000 400 31,798 57.000 20,000 200,000 IT Assets Employees Direct labour Direct labour Required: A Calculate the predetermined PLANTWIDE rate (1 mark) Use the machine hours as the allocation base. B. Calculate the predetermined overhead rates for each Producing department using the DIRECT method (3 marks) C. Calculate the predetermined overhead rates for each Producing department using the STEP method (3 marks) Allocate Servi first. D. Calculate the budgeted PER UNIT total cost for the BEER product using (1) the PLANTWIDE method and (2) the DIRECT method (3 marks) The company only makes two products: beer and wine The Beer-Making production department only makes beer (while the Wine-Making production department only makes wine) Answer the Required using the template below A. Plantwide Department overhead Denominator level of Activity Plantwide rate B. Direct Department overhead Denominator level of Activity Predetermined Overhead Rate c. Step Department overhead Denominator level of Activity Predetermined Overhead Rate D. Plantwide Direct Beer Per unit DM Per unit DL Per unit OH Per unit total cost
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