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  • OH Question - Tutorials On 21-10-2022 - October 2022

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    Palesa
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    The document summarizes overhead costs for various production and service departments of a company. It provides budgeted overhead costs for December 2019 that were allocated to departments. It also lists unallocated overhead costs. Additional data on floor areas, machine values, purchase orders, machine hours, and direct labor hours is given for each department. The percentages for allocating costs of two service departments, Tooling and Maintenance, to production departments is also provided. The company wants to complete an overhead analysis using the direct method, simultaneous method, and repeated distribution method to allocate overhead costs and determine appropriate absorption rates for production departments.

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    OH Question_Tutorials on 21-10-2022- October 2022

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    The document summarizes overhead costs for various production and service departments of a company. It provides budgeted overhead costs for December 2019 that were allocated to departments. It also lists unallocated overhead costs. Additional data on floor areas, machine values, purchase orders, machine hours, and direct labor hours is given for each department. The percentages for allocating costs of two service departments, Tooling and Maintenance, to production departments is also provided. The company wants to complete an overhead analysis using the direct method, simultaneous method, and repeated distribution method to allocate overhead costs and determine appropriate absorption rates for production departments.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    10 views6 pages

    OH Question - Tutorials On 21-10-2022 - October 2022

    Uploaded by

    Palesa
    The document summarizes overhead costs for various production and service departments of a company. It provides budgeted overhead costs for December 2019 that were allocated to departments. It also lists unallocated overhead costs. Additional data on floor areas, machine values, purchase orders, machine hours, and direct labor hours is given for each department. The percentages for allocating costs of two service departments, Tooling and Maintenance, to production departments is also provided. The company wants to complete an overhead analysis using the direct method, simultaneous method, and repeated distribution method to allocate overhead costs and determine appropriate absorption rates for production departments.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 6

    Costs:

    Alpha Beta Zeta T M

    Indirect labour (b) A company operates three production departments, Alpha, Beta and Zeta, and two
    service departments, Tooling (T) and Maintenance (M). Budgeted overhead costs for December 2019 were
    as follows:

    Allocated Overhead P36, 400 P60, 100 P58, 200 P9,800 P17,500

    Unallocated overhead costs:

    Purchasing Costs P60, 000

    Machine Insurance P100, 000

    Building Insurance P40, 000

    Additional Information is provided as follows:

    Alpha Beta Zeta T M

    Floor Area (sqm) 100 500 200 50 150

    Machine Value (P) 40,000 20,000 10,000 10,000 20,000

    Number of Purchase Orders 10 20 50 30 10

    Machine Hours 30,000 25,000 20,000 - -

    Direct Labour Hours 20,000 40,000 15,000 - -

    The following percentages show how service department costs are allocated:

    Alpha Beta Zeta T M

    Portion of M (%) 30 20 40 10 -

    Portion of T (%) 20 30 30 - 20

    Required: Complete the overhead analysis sheet using the

    i)direct Method, simultaneous method and repeated distribution method and to carry out the secondary
    allocation of overhead costs.

    (ii) Determine appropriate overhead absorption rates for all three (3) production departments.
    DIRECT METHOD

    TOTAL Alpha Beta Zeta T M


    Cost Item Apportion basis
    (P) (P) (P) (P) (P) (P)
    1. Specific Allocation              
    Ind. labour Allocated 182,000 36,400 60,100 58,200 9800 17500
    2. Primary Allocation              
    Purchasing Purchase orders 60,000 5,000 10,000 25,000 15,000 5,000
    Machine Insurance Machine value 100,000 40,000 20,000 10,000 10,000 20,000
    Building insurance Floor area 40,000 4,000 20,000 8,000 2,000 6,000
    TOTAL   382,000 85,400 110,100 101,200 36,800 48,500
                   
     
    Reapportion M     16,167 10,778 21,555 -48,500
     
    Reapportion T     9,200 13,800 13,800 -36,800  
    TOTAL   382,000 110,767 134,678 136,555 0 0
    / /
    / 30,000
    Appropriate OAR     40,000 20,000    
    Mhr
    Dlh Mhr
    P3.69 / P3.37 / P6.83 /
             
    Mhr Mhr Mhr

    SIMULTANEOUS
    TOTAL Alpha Beta Zeta T M
    Cost Item Apportion basis
    (P) (P) (P) (P) (P) (P)
    1. Specific Allocation              
    Ind. labour Allocated 182,000 36,400 60,100 58,200 9800 17500
    2. Primary Allocation              
    Purchasing Purchase orders 60,000 5,000 10,000 25,000 15,000 5,000
    Machine Insurance Machine value 100,000 40,000 20,000 10,000 10,000 20,000
    Building insurance Floor area 40,000 4,000 20,000 8,000 2,000 6,000
    TOTAL   382,000 85,400 110,100 101,200 36,800 48,500
                   
    0
    Reapportion M Reapportion M   17,100 11,400 22,800 57,000
    0
    Reapportion T Reapportion T   8,500 12,750 12,750 42,500 0
    TOTAL   382,000 111,000 134,250 136,750 0 0
    / / /
    Appropriate OAR     30,000 40,000 20,000    
    Mhr Dlh Mhr
    P3.70 / P3.36 / P6.84 /
             
    Mhr Mhr Mhr

    M=48500+0.2T
    T=36800+0.1M

    After solving equation


    M=57000
    T=42500
    REPEATED METHOD

    TOTAL Alpha Beta Zeta T M


    Cost Item Apportion basis
    (P) (P) (P) (P) (P) (P)
    1. Specific Allocation              
    Ind. labour Allocated 182,000 36,400 60,100 58,200 9800 17500
    2. Primary Allocation              
    Purchasing Purchase orders 60,000 5,000 10,000 25,000 15,000 5,000
    Machine Insurance Machine value 100,000 40,000 20,000 10,000 10,000 20,000
    Building insurance Floor area 40,000 4,000 20,000 8,000 2,000 6,000
    TOTAL   382,000 85,400 110,100 101,200 36,800 48,500
                   
    4,850
    Reapportion M     14,500 9,700 19,400 -48,500
    41,650
    Reapportion T     8,330 12,495 12,495 -41,650 8,330
    Reapportion M     2,299 1,666 3,332 833 -8,330
    Reapportion T     167 250 250 -833 167
    Reapportion M     50 333 67 16.7 -167
    Reapportion T     3.34 5 5 (16.70 3.34
    Reapportion M     1.11 1.11 1.11 - (3,34)
    TOTAL   382,000 111,000 134,250 136,749 0 0
    / / /
    Appropriate OAR     30,000 40,000 20,000    
    Mhr Dlh Mhr
    P3.70 / P3.36 / P6.84 /
             
    Mhr Mhr Mhr

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