Calculate production overhead absorption rates

Reference no: EM13506029

Question :The information given below relates to the forthcoming period for a manufacturers'' operation. There are four cost centres for which two are involved in production and two are services.

Production departments service departments
total A B CANTEEN STORES
Allocated 141000 43000 60000 17000 21000
other cost;
Rent&rates 9000
building-
insurance 7000
Electricity 14000
plant-
depreciation 57000
plant-
insurance 17000
TOTAL 245 000

Additional information
Area occupied (sq.m) 15200 11400 3800 7600
plant at cost 3900 1800 - 300
number of employees 1200 600 60 200
machine hours 54400 1600 - -
direct labour hours 13600 36000 - -
no.of stores requisition 5600 700 700 -

Required

a. Prepare a schedule in which you apportion the overhead costs to production departments using repeated distribution method or algebraic method. The bases of apportioning canteen and stores overhead cost are number of employees and number of stores requisitions respectively.

b. Calculate production overhead absorption rates for departments A and B using machine hours for department A and direct labour hours for department B

Reference no: EM13506029

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