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  • CMA - FOH (Quiz)

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    - Gold Limited has two production departments and two service departments. Production department 1 has higher floor area, machine costs, employees, and direct labor hours than production department 2. - Overhead costs for the month include rent, depreciation, canteen expenses, and supervision costs for each production department. - The service departments (stores and maintenance) provide work to the other departments. Stores provides 50% of its work to production department 1 and 40% to department 2. Maintenance provides 45% of its work to department 1 and 50% to department 2. - The question requires calculating the absorption rates for each production department to allocate overheads.

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    - Gold Limited has two production departments and two service departments. Production department 1 has higher floor area, machine costs, employees, and direct labor hours than production department 2. - Overhead costs for the month include rent, depreciation, canteen expenses, and supervision costs for each production department. - The service departments (stores and maintenance) provide work to the other departments. Stores provides 50% of its work to production department 1 and 40% to department 2. Maintenance provides 45% of its work to department 1 and 50% to department 2. - The question requires calculating the absorption rates for each production department to allocate overheads.

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    8 views1 page

    CMA - FOH (Quiz)

    Uploaded by

    Ahmed Tahir
    - Gold Limited has two production departments and two service departments. Production department 1 has higher floor area, machine costs, employees, and direct labor hours than production department 2. - Overhead costs for the month include rent, depreciation, canteen expenses, and supervision costs for each production department. - The service departments (stores and maintenance) provide work to the other departments. Stores provides 50% of its work to production department 1 and 40% to department 2. Maintenance provides 45% of its work to department 1 and 50% to department 2. - The question requires calculating the absorption rates for each production department to allocate overheads.

    Copyright:

    © All Rights Reserved
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    of 1

    SKANS School of Accountancy

    Cost & Management Accounting


    Autumn 2023 Total marks: 25
    Sir Abdul Azeem Total time: 45 min
    Question 1: Gold limited has two production departments and two services department to which the followings
    applies:
    Production Departments Service Departments Total
    1 2 Stores Maintenance
    Floor Area (square meters) 5,900 1,400 400 300 8,000
    Cost of machine (Rs.) 18,000 5,000 1,000 1,000 25,000
    No. of employees 14 6 3 3 26
    Direct labour hours 2,400 1,040 - -
    Machine hours 1,500 4,570
    The following overheads were recorded for the month just ended:
    Rs.
    Rent expense 12,000
    Depreciation expense 6,000
    Canteen expense 2,000
    Supervision cost of production department 1 1,500
    Supervision cost of production department 2 1,000
    The service department’s work for the other departments is as follows:
    Production Departments Service Departments
    Work done by: 1 2 Stores Maintenance
    Stores department 50% 40% -- 10%
    Maintenance department 45% 50% 5% --
    Required: Calculate absorption rates for each production department? (10)
    Question 2: Silver limited is preparing its budget for the year ended 31 December 2022. The company has two
    production departments i.e., Department L and Department M, and two services departments, which are storeroom
    and canteen. The estimated costs for the year ending 31 December 2022 are:

    Rs.
    Depreciation of machinery 8,800
    Direct material cost 200,000
    Security costs of factory premises 6,200
    Factory rent expense 52,000
    Insurance of machinery 2,400
    Supervisors’ salaries 44,000
    Storeroom expenses 12,000
    Canteen expenses 15,600
    Factory premises – insurance 6,700
    The following further information is also relevant:

    Dept. L Dept. M Storeroom Canteen Total


    Floor area (square meters) 12,500 7,500 3,500 2,500 26,000
    Value of machinery (Rs.) 30,000 22,500 10,000 4,500 67,000
    No. of supervisors 2 3 - - 5
    Direct Material consumption (Kgs) 28,000 12,000 - - 40,000
    No. of employees 12 15 3 3 33

    Time spent by store room % 70 30

    Direct labour hours 25,000 31,200

    Required: Calculate absorption rates for the year ending 31 December, 2022 (15)

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