Reference no: EM132759398
The estimated production overheads for 2021, the apportionment bases and relevant information related to the two departments are as follows.
Overhead Total for 2021
Basis of apportionment Factory rental £75,000
Floor area Factory insurance £7,600
Floor area Cleaning £8,900
Floor area Canteen £11,100
Number of employees Factory rates £9,500
Floor area Electricity £22,500
Actual (because separately metered) Machine maintenance £16,464
Number of call-outs Machinery depreciation £30,000
Net book value Canteen depreciation £3,500
Number of employees Supervisors' wages £57,936
Actual Other factory costs £23,000
Floor area Total £265,500
Basis of apportionment
Cutting and turning Assembly and finishing
Floor area (square metres) 3 500 1 500
Direct labour employee numbers 8 17
Electricity (actual) 15 200 7 300
Supervisors' wages (actual) 29 716
28 220
Machinery net book value 250 000 50 000
call outs 18 3
Required:
Problem a) Calculate totals for overheads apportioned to each department (cost centre).
Problem b) Calculate overhead absorption rates for each department based upon machine hours.
Problem c) Using the overhead absorption rates for each department based upon machine hours calculate the total amount of overhead absorbed if 5,000 units of each product are produced and sold in 2021.
Problem d) Calculate the gross profit for each greenhouse and garden seat on the assumption that selling prices remain the same (using the overheads absorbed on the basis of machine hours).
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