Tute 2 – Overheads allocation & apportionment

MAF
 1. The Following information relates to the month of January of
ABC Ltd.

Machini Assembl Finishi Stor

ng y ng es
24, 36,0 16,0 4,0
Area occupied (Sqare metres) 000 00 00 00
1, 2
Plant and Equipment 400 00 60 10
8 2
Number of Employees 400 00 00 20
16, 32,0 4,0
Direct labour hours 000 00 00
32, 67,2 7,2
Direct wages $ 600 00 00
32, 4,0 2
Machine hours 000 00 00
1,1 1
Number of requisitions on stores 310 12 00

Allocated costs
9, 15,0 4,0 6,0
Indirect wages 000 00 00 00
1,4 6
Indirect material 394 00 00
1, 6 1
Maintenance 400 00 00
1, 4 2
Power 600 00 00

other costs (in Total)

2,
Rent 000

Business rates and Taxes 600

Insurance on building 200

Lighting and heating 400

depreciation on plant and 16,
equipment 700
28,
wage related costs 200
Factory administration and 7,
personnel 100
Insurance on plant and 1,
Equipment 670

Cleaning of Factory premises 800

 57,
670

The data above distinguishes between those costs which can and those which
cannot be allocated to a cost centre. The first step is to construct an Over
Head Analysis sheet, having separate columns for each cost centre,
together with a column for the total costs, a description of the cost item and
the basis upon which the cost has been apportioned between the cost centres
if applicable.

Prepare the Overhead Analysis sheet.

2. The following information relates to XYZ Ltd.

 S
e
r
v
i
c
e

D
e
p
a
r
t
m
e
Produc n
tion t
Depart s
ments
Total A B Canteen Stores
70,0 21, 29, 8,4 10,3
Allocated costs 22 328 928 37 29

Other costs
4,6
Rent and Rates 41
3,7
Building Insurance 13
Electricity and 6,8
Gas 00
28,3
Plant Depreciation 90
8,5
Plant Insurance 17
52,0
61

7, 6, 1,5 3,0
Area occupied 735 188 47 94
plant at cost 1, 1
($000) 845 852 - 42
Number of
employees 600 300 30 70
27,
Machine hours 200 800
Direct Labour 6, 18,
 hours 800 000
27, 3,
Number of stores requisitions 400 400

Use this information to calculate a production overhead absorbtion rate for

a) departments Aand B

b) If a particular Job has the following information , calculate the total cost of the job,
based on the information calculated in part a)
Job number 2000
4
DM cost 87
3
DL Cost 17
1
Machine hours in department A 95
Direct Labour hours in 1
department B 02

C
) At the end of the period, the following actual costs and hours were recorded

Dept A Dept B

70,4 52,8
Overheads incurred 83 74
DL 6,7 18,3
hours 40 00
27,9 8
Machine hours 00 50

Calculate the under or over absorption in both

departments