Mickel Ltd is a company that manufactures machine parts. The company has three (3) Production Departments...

 

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Mickel Ltd is a company that manufactures machine parts. The company has three (3) Production Departments and one (1) Service Department. The following information is for the year ended 31 December 2014. Indirect Wages Other 4 000 Cost Storekeeping Rent Light and heat Power Depreciation Insurance: Plant Area (m²) Book Value of Plant No. of store requisitions Effective Horse Power Direct Labour Hours Direct Labour Cost Machine Hours Required: Dept. A You ascertain the following information: Dept. A Dept. B a. used. b. bases. C. cost. Dept. B 6 000 7 500 $70 000 90 $ 40 50 000 $25 000 35 000 11 250 60 $90 000 50 40 000 Dept. C 45 000 9:150 $30 000 $ Dept. C Service $ 5.000 10 000 3 350 50 5 110 000 $ $ 45.000 5 000 Total 10 225 000 6 250 1 $ $35 000 16 000 10 500 7 000 18 000 Service 40 000 340 000 1.000 Analyse the above indirect costs between the departments showing the bases of apportionment you have (13 marks) Re-apportion the costs of the Service Department over the three (3) Production Departments using appropriate (6 marks) Calculate an Overhead Absorption Rate (OAR) for the production departments based on direct labour (6 marks) Mickel Ltd is a company that manufactures machine parts. The company has three (3) Production Departments and one (1) Service Department. The following information is for the year ended 31 December 2014. Indirect Wages Other 4 000 Cost Storekeeping Rent Light and heat Power Depreciation Insurance: Plant Area (m²) Book Value of Plant No. of store requisitions Effective Horse Power Direct Labour Hours Direct Labour Cost Machine Hours Required: Dept. A You ascertain the following information: Dept. A Dept. B a. used. b. bases. C. cost. Dept. B 6 000 7 500 $70 000 90 $ 40 50 000 $25 000 35 000 11 250 60 $90 000 50 40 000 Dept. C 45 000 9:150 $30 000 $ Dept. C Service $ 5.000 10 000 3 350 50 5 110 000 $ $ 45.000 5 000 Total 10 225 000 6 250 1 $ $35 000 16 000 10 500 7 000 18 000 Service 40 000 340 000 1.000 Analyse the above indirect costs between the departments showing the bases of apportionment you have (13 marks) Re-apportion the costs of the Service Department over the three (3) Production Departments using appropriate (6 marks) Calculate an Overhead Absorption Rate (OAR) for the production departments based on direct labour (6 marks)

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a Calculation of Cost of each Department Partculars Basis Dept A Dept B Dept C Service Dept Total In... View the full answer