Western Moon Hotel uses a cost accounting system. There are five sections that are used in the

hotel: Amenities, Catering and Housekeeping that deal directly with customers, with Maintenance

and Administration being internal services.

The following overhead details have been estimated for the next period:

Amenities Catering Housekeeping Maintenance Admin Total

Consumable

materials

10 000 80 000 40 000 40 000 10 000 ?

Staff costs 400 000 600 000 600 000 150 000 150 000 ?

Rent and rates 2 000 000

Content

insurance

170 000

Heating and

lighting

150 000

Depreciation 340 000

The following information is also available:

Amenities Catering Housekeeping Maintenance Admin

Floor area (2

) 20 000 3 000 75 000 1 000 1 000

Value of

equipment 500 000 150 000 100 000 50 000 50 000

Number of

employees

40 30 40 10 15

Maintenance works 80% for Amenities, 10% for Catering and 10% for Housekeeping. Admin

works for 20% for Amenities, 40% for Catering and 40% for Housekeeping.

Required:

a) Calculate the primary overhead allocation rates as well as the secondary allocation for all the

departments. (19)

b) Calculate the predetermined overhead rate for each of the following departments:

i.Amenities using number of employees

ii.Catering using value of equipment

iii.Housekeeping using floor area