IM3.5 Intermediate: Overhead analysis sheet and calculation of overhead rates. Dunstan Ltd manufactures tents and sleeping...

Transcribed Image Text:

IM3.5 Intermediate: Overhead analysis sheet and calculation of overhead rates. Dunstan Ltd manufactures tents and sleeping bags in three separate production departments. The principal manufacturing processes consist of cutting material in the pattern cutting room and sewing the material in either the tent or the sleeping bag departments. For the year to 31 July cost centre expenses and other relevant information are budgeted as follows: Cutting room Raw Main- Tents Sleeping material Canteen tenance () bags () stores () () () Total () () Indirect wages Consumable 147200 6400 19500 20100 41200 15000 45000 materials 54600 5300 4100 2300 18700 24200 Plant depreciation 84200 31200 17500 24600 2500 3400 5000 Power 31700 Heat and light 13800 Rent and rates 14400 Building insurance 13500 Floor area (sq. ft) Estimated 30000 8000 10000 7000 1500 2500 1000 power usage (%) 100 17 38 32 3 8 2 Direct labour (hours) 112000 7000 48000 57000 Machine usage (hours) Value of raw material 87000 2000 40000 45000 - issues (%) 100 62.5 12.5 12.5 - 12.5 Requirements: (a) Prepare in columnar form a statement calculating the overhead absorption rates for each machine hour and each direct labour hour for each of the three production units. You should use bases of apportionment and absorption which you consider most appropriate, and the bases used should be clearly indicated in your statement. (16 marks) IM3.5 Intermediate: Overhead analysis sheet and calculation of overhead rates. Dunstan Ltd manufactures tents and sleeping bags in three separate production departments. The principal manufacturing processes consist of cutting material in the pattern cutting room and sewing the material in either the tent or the sleeping bag departments. For the year to 31 July cost centre expenses and other relevant information are budgeted as follows: Cutting room Raw Main- Tents Sleeping material Canteen tenance () bags () stores () () () Total () () Indirect wages Consumable 147200 6400 19500 20100 41200 15000 45000 materials 54600 5300 4100 2300 18700 24200 Plant depreciation 84200 31200 17500 24600 2500 3400 5000 Power 31700 Heat and light 13800 Rent and rates 14400 Building insurance 13500 Floor area (sq. ft) Estimated 30000 8000 10000 7000 1500 2500 1000 power usage (%) 100 17 38 32 3 8 2 Direct labour (hours) 112000 7000 48000 57000 Machine usage (hours) Value of raw material 87000 2000 40000 45000 - issues (%) 100 62.5 12.5 12.5 - 12.5 Requirements: (a) Prepare in columnar form a statement calculating the overhead absorption rates for each machine hour and each direct labour hour for each of the three production units. You should use bases of apportionment and absorption which you consider most appropriate, and the bases used should be clearly indicated in your statement. (16 marks)

Answer rating: 100% (QA)

To calculate the overhead absorption rates for each machine hour and each direct labour hour for the three production units at Dunstan Ltd we need to allocate the overhead costs appropriately Heres th... View the full answer