(a) Explain the following terms: 

(i) Cost Centre 

(ii) Cost Unit 

(b) Julie and Cleary Ltd manufactures toy soldiers. The company has three production departments - Moulding, Sanding and Painting - and two service departments - Canteen and Maintenance. Estimated indirect overheads for the year ended 30 April 2002 are as follows:

Canteen costs are shared among all the other departments on the basis of number of employees. Maintenance costs are shared among the three production departments on the basis of floor area. 

(i) Prepare an overhead analysis sheet for the year ending 30 April 2002 detailing the total overheads for Moulding, Sanding and Painting. 

(ii) Moulding and Sanding department overhead rates are calculated on a Direct Machine hour basis. Painting department overhead rate is calculated on a Direct Labour hour basis. Calculate the Overhead absorption rate for each of the three production departments for the year ending 30 April 2002. Calculations should be shown to two decimal places.

Transcribed Image Text:

Overhead Administration Cost or Calculation $104 000 $70.000 Electricity Depreciation 10% Indirect wages $360 000 Rent $80 500 Relevant information on the five departments is as follows: Sanding No. of employees Power (kw hours) Cost of Fixed Asset Floor area (sq m) Indirect wages Direct Labour hours Direct Machine hours Moulding 40 1400 $162 000 625 $6.000 8 000 7 750 50 1600 $175 000 475 $11 250 7 800 5.625 Basis of Apportionment or Allocation Number of employees Kilowatt hours used Cost of Fixed Asset Allocated Floor area (square metres) Painting Canteen Maintenance 40 lewend din 38 son ay 40 S 150 190 $40 000 $80 000 500 400 $6 375 $36 190 7 500 1 250 160 $43 000 295 300 $18 7502