Question $14$

The Utopian Hotel is developing a cost accounting system. Initially it has been decided to create

four cost centres: Residential and Catering deal directly with customers, while Housekeeping and

Maintenance are internal service cost centres.

The following overhead details have been estimated for the next period:

The following information is also available:

It is estimated that there will be $2800$ guest$-$nights and $16000$ meals will be served during the

budgeted period. Housekeeping works $70\%$ for residential and $30\%$ for catering, and maintenance

works $20\%$ for housekeeping, $30\%$ for catering and $50\%$ for residential.

Required:

Prepare an overhead statement clearly indicating the apportionments to each cost center. Use

the following bases to apportion the overheads to the various departments:

Rent and rates

Content insurance

Heating and lighting

Depreciation

Floor area

Value of equipment

Floor area

Value of equipment

Calculate appropriate overhead allocation rates for residential $($based on guest nights$)$ and

catering centres $($based on meals served$).$

Calculate the under or over$-$ allocated overheads if the actual results were as follows:

Residential: $3050$ guest nights with overheads of R $13200$