TUTORIAL 4

a. i. Agrowid Sdn Bhd

Overhead Analysis Sheet for December 2018
Production department Service department
Overheads Basis of apportionment
Cleaning Packaging Maintenance Store
Indirect material Allocated 17,100 14,500 31,600
Indirect labour Allocated 8,100 10,950 1,570 1,450 22,070
50/125 x 43,500 40/125 x 43,500 10/125 x 43,500 25/125 x 43,500
Rental of factory Floor area 17,400 13,920 3,480 8,700 43,500
345/800 x 80,000 285/800 x 80,000 50/800 x 80,000 120/800 x 80,000
Electricity Kilowatt hours 34,500 28,500 5,000 12,000 80,000
20/40 x 36,000 14/40 x 36,000 6/40 x 36,000
Insurance on equipment Value of equipment 18,000 12,600 5,400 36,000
10/50 x 23,250 30/50 x 23,250 2/50 x 23,250 8/50 x 23,250
Supervisory salary Number of employees 4,650 13,950 930 3,720 23,250
TOTAL OVERHEADS 99,750 94,420 10,980 31,270 236,420

Reapportionment
3/6 x 10,980 2/6 x 10,980 1/6 x 10,980
Maintenance Maintenance hours (3:2:1) 5,490 3,660 (10,980) 1,830 0
360/480 x 33,100 120/480 x 33,100
Store No. of materials req. (360:120) 24,825 8,275 (33,100) 0
TOTAL PRODUCTION OVERHEADS 130,065 106,355 0 0 236,420

ii. OAR basis Machine hours 22,700

Direct labour hours 28,000

OAR 130,065 106,355

22,700 28,000

= RM5.73/MH = RM3.80/DLH

iii. 𝑇𝑜𝑡𝑎𝑙 𝑏𝑢𝑑𝑔𝑒𝑡𝑒𝑑 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑜𝑣𝑒𝑟ℎ𝑒𝑎𝑑𝑠 𝑓𝑜𝑟 𝑎𝑙𝑙 𝑝𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 𝑑𝑒𝑝𝑎𝑟𝑡𝑚𝑒𝑛𝑡𝑠 130,065 + 106,355 236,420
𝐵𝑙𝑎𝑛𝑘𝑒𝑡 𝑂𝐴𝑅 = = = = 𝑅𝑀7.12 𝑝𝑒𝑟 𝑀𝐻
𝑇𝑜𝑡𝑎𝑙 𝑏𝑢𝑑𝑔𝑒𝑡𝑒𝑑 𝑚𝑎𝑐ℎ𝑖𝑛𝑒 ℎ𝑜𝑢𝑟𝑠 22,700 + 10,500 33,200

b. Cleaning Packaging
5.73 x 30,500 3.80 x 30,000
Overhead absorbed (OAR x Actual basis)
174,765 114,000

Actual overheads 170,800 116,000

3,965 (2,000)
Over/(under) absorption of overheads
OVER UNDER

c. TWO differences between Blanket OAR and Departmental OAR:

 Blanket OAR is an absorption rate that is calculated to be use for the whole company, where as
Departmental OAR are absorption rates that are calculated to be use for each separate department
 Blanket OAR is suitable for company that manufactures only a single product, where as
Departmental OAR is suitable for company that manufactures multiple products