Reference no: EM131188462
A factory in Norfolk processes turkeys for sale. The production process is classified into four cost centres and the relevant forecast information for each of the cost centres is as follows:
|
|
Total
|
Cutting
£
|
Cooking
£
|
Canteen
£
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Maintenance
£
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|
Indirect tabour Consumables
Heating and lighting Rent and rates Depreciation th,ct
Supervision CIA., (MIS
Power
|
340,000 82,000 24,000 36,000 60,000 48,000 40,000
|
120,000
24,000
|
140,000
32,000
|
30,000
20,000
|
50,000
6,000
|
| 630,000 |
The following information is also available:
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|
Total |
Cutting |
Cooking Canteen Maintenance
|
|
Floor space (sq metres)
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60,000 |
20,000
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24,000
|
6,000
|
10,000
|
|
Book value of machinery
|
(E) 600,000
|
300,000
|
240,000
|
20,000
|
40,000
|
|
Number of employees
|
160
|
80
|
60
|
10
|
10
|
|
Kilowatt hours
|
20,000
|
9,0W0
|
8,000
|
1,000
|
2,000
|
|
Direct materials (f)
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|
100,000
|
50,000
|
|
|
|
Direct labour (£)
|
|
50,000
|
42,000
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|
|
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Maintenance hours
|
|
8,000
|
6,000
|
|
|
|
Labour hours
|
|
12,640
|
8,400
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|
|
|
Machine hours
|
|
|
15,700
|
|
|
|
Required:
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|
|
|
|
|
Required:
(a) An overhead cost statement which clearly shows the base% of apportionment.
(b) The labour hour overhead absorption rate for the Cutting Department and a machine hour overhead rate for the Cooking Department.
(c) How many alternative methods of overhead absorption rr. ght be used in this situation? What are the benefiti and limitations with regard to Using rr:ese rates at the company?
(d) The actual overhead figures for the year were:
Cutting Department: £310,000; 12,000 labour hours..
Cooking Department: £312,000; 15,810 machine hours.
What is the under/over-absorption for each department?
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