Ocean View Limited has two production departments: Dept. A and Dept. B, it also has two...

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Ocean View Limited has two production departments: Dept. A and Dept. B, it also has two service departments: Maintenance and Stores. It manufactures a special part that passes through both departments. For the period, the following budgeted data are indicated below: The following budgeted costs are to be allocated to the departments for the corresponding period: Dept. A Indirect Material $1,000,000 Indirect Labour $1,500,000 Dept. B $1,250,000 Maintenance $125,000 $1,250,000 $100,000 Stores $125,000 $150,000 Additionally, the following un-allocated budgeted overhead costs were identified by the production manager: $ Rent and Rates 500,000 Plant Depreciation 450,000 Heat and Light 300,000 Plant Insurance 1,250,000 Canteen costs 250,000 The following information is also available: A B Maintenance Stores Direct Labour Hours 25,000 125,000 Plant value $20,000,000 $20,000,000 $5,000,000 $5,000,000 Floor area (sq. m) 18,750 18,750 6,250 6,250 Machine hours 100,000 25,000 Employees 50 35 10 5 Stores requisitions 15,000 8,750 1,250 Maintenance Hours 10,000 12,500 2,500 Required: a. Prepare a schedule to apportion the notional service cost to production and the total overheads for the production departments after apportionment. (10% marks) b. Calculate the OAR for the both production departments by choosing the most appropriate bases and using simultaneous equation to assist in re-apportioning the service department costs. (Use two decimal places for OAR) (7 marks) c. Assuming department A and B utilised 37,500, 131,250 direct labour hours and 93,750 and 27.500 machine hours respectively for the period. Calculate overheads absorbed within these departments. (4 marks) d. Distinguish between overhead apportionment and overhead allocation. (3 marks) Ocean View Limited has two production departments: Dept. A and Dept. B, it also has two service departments: Maintenance and Stores. It manufactures a special part that passes through both departments. For the period, the following budgeted data are indicated below: The following budgeted costs are to be allocated to the departments for the corresponding period: Dept. A Indirect Material $1,000,000 Indirect Labour $1,500,000 Dept. B $1,250,000 Maintenance $125,000 $1,250,000 $100,000 Stores $125,000 $150,000 Additionally, the following un-allocated budgeted overhead costs were identified by the production manager: $ Rent and Rates 500,000 Plant Depreciation 450,000 Heat and Light 300,000 Plant Insurance 1,250,000 Canteen costs 250,000 The following information is also available: A B Maintenance Stores Direct Labour Hours 25,000 125,000 Plant value $20,000,000 $20,000,000 $5,000,000 $5,000,000 Floor area (sq. m) 18,750 18,750 6,250 6,250 Machine hours 100,000 25,000 Employees 50 35 10 5 Stores requisitions 15,000 8,750 1,250 Maintenance Hours 10,000 12,500 2,500 Required: a. Prepare a schedule to apportion the notional service cost to production and the total overheads for the production departments after apportionment. (10% marks) b. Calculate the OAR for the both production departments by choosing the most appropriate bases and using simultaneous equation to assist in re-apportioning the service department costs. (Use two decimal places for OAR) (7 marks) c. Assuming department A and B utilised 37,500, 131,250 direct labour hours and 93,750 and 27.500 machine hours respectively for the period. Calculate overheads absorbed within these departments. (4 marks) d. Distinguish between overhead apportionment and overhead allocation. (3 marks)