Moono Limited is a manufacturing company and has the following budgeted overhead costs for two production departments (Machining and Assembly departments) and two service departments (Stores and Maintenance) for the next financial year. Indirect Materials Machinery department 100,000 Assembly department 80,000 Stores department 50,000 Maintenance department 15,000 245,000 5 Indirect wages Machinery department 90,000 Assembly department 60,000 Stores department 70,000 Maintenance department 55,000 275,000 Managers Salaries 70,000 Depreciation of machinery 150,000 Heating and Lighting 50,000 Building insurance 25,000 Insurance of Machinery 100,000 Rent and rates 75,000 Total 990,000 6 The following additional information is provided: Details Production departments Service departments Machining Assembly Stores Maintenance Area occupied (M2) 500 7,500 7,000 5,000 Number of employees 15 20 8 7 Value of machines (Kwacha) 2,000,000 500,000 Materials issued from stores (Kwacha) 50,000 20,000 Machine hours 45,000 30,000 Direct labour hours 100,000 80,000 Maintenance hours 4,500 4,300 1,200

 Required: 

a) Prepare an overhead analysis sheet showing clearly the basis of apportionment used for each item of expense. 

b) Calculate appropriate overhead absorption rates for the two production departments to two decimal places.

Answer rating: 100% (QA)

a Basis of apportionment Indirect Materials Machining department 100000245000 x 990000 405714 ... View the full answer