Reference no: EM133064426
Question 1: Grand stands Ltd manufactures sheet music stands in two separate departments: Cutting and Welding. The following data relate to the year just ended:
|
|
Cutting Dept
|
Welding Dept
|
Total plant
|
|
Budgeted manufacturing overhead
|
$40 000
|
$80 000
|
$120 000
|
|
Budgeted machine hours
|
16 000
|
64 000
|
80 000
|
|
Budgeted direct labour hours
|
20 000
|
10 000
|
30 000
|
The following information is related to the production of one unit product A and B.
|
Product A
|
|
|
Cutting Dept
|
Welding Dept
|
Total plant
|
|
Machine hours
|
2.5
|
4.0
|
6.5
|
|
Direct labour hours
|
4.0
|
1.0
|
5.0
|
|
Product B
|
|
|
Cutting Dept
|
Welding Dept
|
Total plant
|
|
Machine hours
|
3
|
6
|
9.0
|
|
Direct labour hours
|
4.5
|
1.5
|
6.0
|
Required:
Calculate manufacturing overhead cost of the product A and B using:
a) Predetermined plantwide rate based on direct labour hours
b) Predetermined plantwide rate based on machine hours
Question 2:
Using the information given in lecture example 1, calculate overhead costs for Product A and Product B using departmental rates based on: Direct labour hours for Cutting department and Machine hours for Welding department.
|
|
Cutting Dept
|
Welding Dept
|
Total plant
|
|
Budgeted manufacturing overhead
|
$40 000
|
$80 000
|
$120 000
|
|
Budgeted machine hours
|
16 000
|
64 000
|
80 000
|
|
Budgeted direct labour hours
|
20 000
|
10 000
|
30 000
|
The following information is related to the production of one unit product A and B.
|
Product A
|
|
|
Cutting Dept
|
Welding Dept
|
Total plant
|
|
Machine hours
|
2.5
|
4.0
|
6.5
|
|
Direct labour hours
|
4.0
|
1.0
|
5.0
|
|
Product B
|
|
|
Cutting Dept
|
Welding Dept
|
Total plant
|
|
Machine hours
|
3
|
6
|
9.0
|
|
Direct labour hours
|
4.5
|
1.5
|
6.0
|
Question 3: The Smith Company has two service departments, Plant Maintenance (S1) and Information System (S2 ), and two production departments, Machining ( P1) and Assembly (P2). The budgeted overhead costs incurred in each dep. are given as follows:
|
S1
|
S2
|
P1
|
P2
|
|
$84,000
|
$96,000
|
$100,000
|
$150,000
|
The following table provides the usage of the two support departments' output:
|
Service provided by:
|
Service Provided to:
|
|
S1
|
S2
|
P1
|
P2
|
|
S1
|
-
|
30%
|
30%
|
40%
|
|
S2
|
20%
|
-
|
60%
|
20%
|
Required:
Allocate the budgeted OH costs from support dep. (S1 and S2) to production dep. (P1 and P2), using the direct method, step-down method and reciprocal method
Question 4: Chicago Pty Ltd manufactures gauges for dashboards. It has two production departments (P1 and P2) and three service departments (S1, S2 and S3). The service costs incurred are $180,000, $270,000 and 200,000 for S1, S2 and S3 respectively. The production costs incurred in P1 and P2 are $200,000 and 250 000 respectively. The usage of the three service departments is as follows:
|
Service provided by:
|
Service provides to:
|
|
S1
|
S2
|
S3
|
P1
|
P2
|
|
S1
|
-
|
5%
|
5%
|
40%
|
50%
|
|
S2
|
-
|
-
|
10%
|
40%
|
50%
|
|
S3
|
5%
|
-
|
-
|
70%
|
25%
|
Required:
Allocate the overhead costs from support dep. (S1, S2 and S3) to production departments (P1 and P2), using the step-down method.
Question 5:
The Dexter Manufacturing Company has two production departments (P1 and P2) and two service departments (S1 and S2). The usage of the two service departments is as follows:
|
Service provided by:
|
Service Provided to:
|
|
S1
$90,000
|
S2
$50,000
|
P1
$200,000
|
P2
$250,000
|
|
Allocate S1
|
-
|
10%
|
60%
|
30%
|
|
Allocate S2
|
20%
|
-
|
40%
|
40%
|
Required:
Allocate the overhead costs from support dep. (S1 and S2) to production dep. (P1 and P2), using the reciprocal method.