Colours Ltd has three production departments (Blue, Red and Green) and one service department in its...

 

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Colours Ltd has three production departments (Blue, Red and Green) and one service department in its factory. A predetermined overhead absorption rate has been established for each of the production departments on the basis of machine hours at normal capacity. The overheads of each production department comprise directly allocated expenses and a share of the overheads of the service department, apportioned in the ratio 2:1:2 to departments Blue, Red and Green respectively. All overheads are classified as fixed in nature. The actual overhead incurred in each department was in line with the budget (i.e. there was no variance). The following table of incomplete information is available concerning the apportionment and absorption of production overheads for a period. Production departments Red 152 316.45 Blue Green Budgeted allocated expenses (ZMW) 125 649.25 159 326.15 Budgeted service department apportionment 249 653.10 Total Overheads per department Normal machine hours capacity Predetermined absorption rate (ZMW/machine hour) Actual machine utilisation Over((under) absorption of overheads(ZMW) D. 4 952 hours F G H. 36.95 6 943 hours K 7 069 hours (47592.72) J (68135.21) Required: Calculate the missing figures for values A to K. [3 MARKS each] Colours Ltd has three production departments (Blue, Red and Green) and one service department in its factory. A predetermined overhead absorption rate has been established for each of the production departments on the basis of machine hours at normal capacity. The overheads of each production department comprise directly allocated expenses and a share of the overheads of the service department, apportioned in the ratio 2:1:2 to departments Blue, Red and Green respectively. All overheads are classified as fixed in nature. The actual overhead incurred in each department was in line with the budget (i.e. there was no variance). The following table of incomplete information is available concerning the apportionment and absorption of production overheads for a period. Production departments Red 152 316.45 Blue Green Budgeted allocated expenses (ZMW) 125 649.25 159 326.15 Budgeted service department apportionment 249 653.10 Total Overheads per department Normal machine hours capacity Predetermined absorption rate (ZMW/machine hour) Actual machine utilisation Over((under) absorption of overheads(ZMW) D. 4 952 hours F G H. 36.95 6 943 hours K 7 069 hours (47592.72) J (68135.21) Required: Calculate the missing figures for values A to K. [3 MARKS each]

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Given Ratio of share of overheads of the service department to departments Blue Red and Green is 212 ... View the full answer