Determine the budgeted overhead absorption rate for machine

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Reference no: EM13907551

The annual budgeted production overheads for a factory with two production departments (Machine Shop A and Machine Shop B) and one service department (Stores) are as follows:

Indirect wages and supervision Machine Shop A	£ 150,000	£
Machine Shop B	100,000
Stores	30,000
Indirect materials		280,000
Machine Shop A	100,000
Machine Shop B	50,000
Stores	10,000
		160,000
Rent		60,000
Light and heat		30,000
Insurance for machinery		20,000

550,000

The following information is also available:

Area occupied (sq m)

Book value of machinery (£)

Issues of direct and indirect

Machine Shop A 20,000

60,000

Machine Shop B 5,000

20,000

Stores

5,000

material from stores (£)

Budgeted machine hours

350,000 200,000

Machine Shop A 36,000 machine hours Machine Shop B 9,500 machine hours

You are required to:

(a) Determine the budgeted overhead absorption rate for Machine Shop A.

(b) Determine the budgeted overhead absorption rate for Machine Shop B.

(c) Calculate the production overheads which would be charged to Product X if the product spent 6 hours in Machine Shop A and 3 hours in Machine Shop B.

Reference no: EM13907551

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