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(6 marks) (Hints: Read Example 17 and Activity 15 on your workbook) This study resource was shared via CourseHero.com
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11. The Accountant for APC Manufacturing Pty Ltd, a manufacturer of Sports Wear has accumulated the following information related to the anticipated overhead costs for the coming year Factory Office Stores Assembly Finishing Total Dept Overhead $60,000 $15,000 $80,000 $45,000 $200,000 Departmental Information Plant values $15,000 $35,000 $270,000 $80,000 $400,000 Floor space 100m 2 200m 2 500m 2 300m 2 1,100m 2 Requisitions 60 40 100 No. of employees 22 55 33 110 Direct labour hours 2,000 6,000 8,000 Machine hours 12,650 2,350 15,000 The firm uses the direct method for re-allocation of service department (Factory Office and Stores) costs to production departments (Assembly and Finishing). The factory office would be reallocated to production departments according to the service rendered to production departments as measured by the number of employees in each production department. The stores would be reallocated to production departments according to the service rendered to production departments as measured by the number of materials requisitions in each production department. Required: 1. Determine department overhead rates based on (i) Machine hours for Assembly and (ii) Direct Labour hours for Finishing. Show all the workings in your answers. (Hints: You can use the following table to answer this part of question.) (10 marks) 2. Compute a plant wide overhead rate based on Direct Labour hours. Show all the workings in your answers. (2 marks) (Hints: Read Examples 13 to 16 on your workbook) Assembly Finishing Office Stores Total Dept overhead $80,000 $45,000 $60,000 $15,000 $200,000 Reallocate Office This study resource was shared via CourseHero.com
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Reallocate Stores Total Driver Department overhead rates a Determination of Department overhead rates based on machine hours for Assembly and Direct labor hours for Finishing:- Assembly Finishing Factory Office Stores Total Dept Overhead $ 80,0 00 $ 45,0 00 $ 60,0 00 $ 15,0 00 $ 200,0 00 Reallocate Office (See WN-1) $ 30,0 00 $ 18,0 00 $ (60,0 00) $ 12,0 00 Reallocate Stores (See WN-2) $ 16,2 00 $ 10,8 00 $ - $ (27,000) Total $ 126,2 00 $ 73,8 00 $ - $ - $ 200,0 00 Driver 12650 6000 Department Overhead Rates $ 9. 98 $ 12. 30 WN- 1 Reallocation of Office Overhead of $60000 Department No. of Employee s Per Employee = $60000/1 10 Cost Distributed a b c = a*b Assembly 55 $ 545. 45 $ 30,0 00 Finishing 33 $ 545. 45 $ 18,0 00 Stores 22 $ 545. 45 $ 12,0 00 Total 1 10 $ 60,0 00 This study resource was shared via CourseHero.com
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WN- 2 Reallocation of Store Overhead of 15000+12000 (allocated from office) =$27000 Department No. of Requisitio ns Per Requisitio n = $27000/1 00 Cost Distributed a b c = a*b Assembly 60 $ 270. 00 $ 16,2 00 Finishing 40 $ 270. 00 $ 10,8 00 Total 1 00 $ 27,0 00 b Computation of Plantwide overhead rate based on direct labor hours:- a Total overhead $ 200,0 00 b Total Direct labor hours 8,0 00 c Plantwide overhead rate (a/b) $ 25. 00 Feel free to ask any clarification, if required. Please provide feedback by thumbs up, if satisfied. It will be highly appreciated. Thank you. This study resource was shared via CourseHero.com Powered by TCPDF ()
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