The following budgeted information relate to Amin Bhd. cost centres for the year 2020.

	Total (RM)	Department A (RM)	Department B (RM)	Department C (RM)	Department D (RM)
Direct labour	137,200	58,300	46,800	18,500	13,600
Indirect labour	73,290	24,200	34,400	8,900	5,790
Factory rent	48,000
Heat and lighting	25,400
Depreciation	15,000
Machinery power	80,100

Continued

NR 2/3

PMA0064 ESSENTIALS OF MANAGEMENT ACCOUNTING 9 MARCH 2021

Other information available as follows:

	Department A	Department B	Department C	Department D
Floor space occupied (m2)	1,800	1,400	800	500
Value of machinery (RM000)	25	30	12	10
Direct labour hours	10,000	14,000	5,000	2,500
Horse power of machinery	6,500	800	5,500	700
Service hours	75	80	60	-
Number of employees	50	45	-	-

1. Department A and B are production cost centres and Department C and D are service cost centres.

2. Department D renders the greatest service and is allocated first.

3. Department D overheads are reallocated based on Service Hours and Department C overheads are reallocated based on number of employees.

4. Actual overheads for Department A is RM145,000 and RM70,000 for Department B. 5. Machine hours and labour hours are used to calculate overhead absorption rate for Department A and B, respectively.

6. 5,000 machine hours are budgeted and 4,500 machine hours were worked for Department A.

7. 4,500 labour hours are budgeted and 3,000 labour hours were worked for Department B.

Required:

a) Prepare an overhead analysis sheet, showing the allocation of overhead costs to the four cost centres, clearly showing the basis of allocation. (10 marks)

b) Allocate service cost centres overhead costs to production department. (7 marks)

c) Calculate the overhead absorption rates for Department A on the basis of machine hours and Department B on the basis of labour hours. (3 marks)

d) Calculate the over/under absorption of overheads for each department. (5 marks)

(Total 25 marks)