Auckland (Manufacturers) Ltd has two manufacturing departments: 

(i) Machining 

(ii) Assembly. 

It also has two service departments:

(i) Maintenance 

(ii) Power house. 

The information in the table below is available for the coming year.

Required 

(a) Analyse the above indirect costs between the four departments showing the bases of apportionment you have used. 

(b) Re-apportion the costs of the service departments over the two production departments using appropriate bases. 

(c) Calculate an overhead absorption rate for the machining department based on machine hours and an overhead absorption rate for the assembly department based on direct labour hours.

Transcribed Image Text:

Indirect materials Indirect labour Rent and local taxes Supervision Plant depreciation Further information is available as follows. No. of employees Area (metres²) Plant valuation ($000s) Direct labour hours Machine hours aallot Machining $000 298 706 Maintenance hours Units of power used Assembly $000 482 918 Machining 40 3 000 13 000 3 200 11 080 1.800 4 200 Maintenance $000 132 282 Assembly 80 5000 5000 4800 2320 600 1200 Maintenance 20 1000 2400 Power house $000 A 600 152 672 Power house 10 200 1600 Total $000 1064 2578 1426 660 1650 7378