Scribd
Upload
44 views

Assignemnt 1 - 3 Marks

The document contains 4 questions regarding overhead cost calculations for production departments. Question 1 involves calculating overhead costs and absorption rates for 3 departments (A, B, C), and calculating product cost and overhead under/over absorption. Question 2 calculates total overhead for production departments using service department allocation percentages. Question 3 reallocates service department overhead based on employee numbers and materials requisitions. Question 4 calculates budgeted and actual overhead absorption rates and under/over absorption for 2 production departments using machine hours.

Uploaded by

Hafsa Hayat
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
44 views

Assignemnt 1 - 3 Marks

The document contains 4 questions regarding overhead cost calculations for production departments. Question 1 involves calculating overhead costs and absorption rates for 3 departments (A, B, C), and calculating product cost and overhead under/over absorption. Question 2 calculates total overhead for production departments using service department allocation percentages. Question 3 reallocates service department overhead based on employee numbers and materials requisitions. Question 4 calculates budgeted and actual overhead absorption rates and under/over absorption for 2 production departments using machine hours.

Uploaded by

Hafsa Hayat
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 3

Assignment 1 - Overheads

Q1.

Required
(a) Calculate the overhead costs for each production department.
(b) Calculate an overhead absorption rate for the period for each department, assuming that a separate
direct labour hour absorption rate is used for each department.
(c) calculate cost per unit of product Alpha whose prime cost is Rs. 40 and it will consume 2 labour
hours in dept A, 1 labour hour in dept B and 24 min in dept C.
(d) Assuming that actual overheads of Production department A were 10% higher than budgeted
overheads and actual labour hours were 8,500, calculate any under or over absorption in the
department A.
(e) Assuming that actual overheads of Production department B were Rs. 8,000 lower than budgeted
overheads and actual labour hours were 6,100, calculate any under or over absorption in the department
B.
Q2.

The service department are apportioned as follows:


Canteen Boiler house
Production dept 1 40% 30%
Production dept 2 20% 40%
Production dept 3 30% 30%
Canteen - -
Boiler house 10% -
Required:
Calculate total overheads of all production departments

Q3. A company has three production cost centres (P1, P2 and P3) and two service cost centres (S1 and
S2) in its factory. The budgeted production overhead costs for a period, totalling £487,430, have been
allocated and apportioned to cost centres as follows:
Production cost centre Service cost centre
P1 P2 P3 S1 S2
Allocated and
apportioned overheads £176,860 £96,250 £134,770 £42,150 £37,400
Overheads of S1 are reapportioned on the basis of the number of materials requisition notes (MRN)
raised in the period.
The overheads of S2 are reapportioned on the basis of the number of employees in the other cost
centres.
The following additional actual information is available for the period:
Cost centre Number of employees Number of MRNs
P1 20 4,970
P2 25 3,550
P3 50 5,680
S1 8
S2 5
Reapportion the service cost centre overheads.
Q4. There are two production cost centres (P1 and P2) and one service cost centre (S1) in a factory.
Overheads are absorbed in each production cost centre on the basis of machine hours.
The following budgeted information is available for a period:
1. Overhead costs allocated and apportioned:
 Production cost centre P1 $65,800
 Production cost centre P2 $85,500
 Service cost centre S1 $28,000
2. Service cost centre overheads are re-apportioned to the production cost centres as follows:
 Production cost centre P1 40%
 Production cost centre P2 60%
3. Machine hours in cost centre P1 are 5,500.
4. Overhead absorption rate in cost centre P2 is $16·50 per machine hour.
The following actual information is available for the same period:
1. Overhead costs incurred in cost centre P1 (including the re-apportionment of cost centre S1 costs)
totaled $75,840.
2. Machine hours worked:
 Production cost centre P1 5,340
 Production cost centre P2 6,450
3. Overheads were over-absorbed by $3,550 in cost centre P2.
Required:
(a) For production cost centre P1, calculate the period’s:
(i) budgeted production overhead absorption rate; and (4 marks)
(ii) over or under absorption of overhead. (4 marks)
(b) For production cost centre P2, calculate the period’s:
(i) budgeted machine hours; and (4 marks)
(ii) actual overhead incurred. (4 marks)

You might also like