Question 5 (31 marks) Below are the actual overhead and actual activities for the three (3)...
Fantastic news! We've Found the answer you've been seeking!
Question:
![](https://dsd5zvtm8ll6.cloudfront.net/si.experts.images/questions/2022/10/634504e534222_1665467869622.jpg)
Transcribed Image Text:
Question 5 (31 marks) Below are the actual overhead and actual activities for the three (3) production departments at General's Ltd for the year ended August 2018. Indirect Labour Indirect Materials Other Expenses Machine hours Labour hours Indirect Labour Indirect Materials Other Expenses Labour hours Machine hours A B $3,375,000 $ 450,000 $1,125,000 $ 675,000 $2,250,000 $3,375,000 225,000 450,000 1,125,000 225,000 Prior to the end of the period, the production manager provided the following budgeted information for each of the departments. The entity also has two service departments: Stores and Maintenance. The following immediately below are the budgeted data for the same period: Maintenance Stores B A $2,250,000 $1,687,500 $ 675,000 $ 562,500 $2,700,000 $2,250,000 1,350,000 225,000 180,000 337,500 A 20% 50% $ 675,000 $1,575,000 $2,812,500 675,000 562,500 B 40% 20% Overhead is absorbed based on how intensive the individual departments are considered. It has been estimated that service department usage is as follows: C $2,812,500 $1,687,500 $1,125,000 450,000 562,500 с 20% 20% Maintenance Stores $ 1,125,000 $ 900,000 $ 1,350,000 $ 1,575,000 $ 450,000 $ 1,800,000 (b) Calculate the overhead absorbed in each department. 1 Maintenance 10% Stores 20% Required: (a) Prepare a schedule to apportion the notional service cost to production and the total overheads for the production departments after apportionment. Hint: use simultaneous equations to derive the notional values. (13 marks) (12 marks) (c) Calculate the under/over absorbed overheads for each department and the entity in total. (6 marks) (d) What are the two main factors that give rise to over/under absorption of overheads? (2 marks) Question 5 (31 marks) Below are the actual overhead and actual activities for the three (3) production departments at General's Ltd for the year ended August 2018. Indirect Labour Indirect Materials Other Expenses Machine hours Labour hours Indirect Labour Indirect Materials Other Expenses Labour hours Machine hours A B $3,375,000 $ 450,000 $1,125,000 $ 675,000 $2,250,000 $3,375,000 225,000 450,000 1,125,000 225,000 Prior to the end of the period, the production manager provided the following budgeted information for each of the departments. The entity also has two service departments: Stores and Maintenance. The following immediately below are the budgeted data for the same period: Maintenance Stores B A $2,250,000 $1,687,500 $ 675,000 $ 562,500 $2,700,000 $2,250,000 1,350,000 225,000 180,000 337,500 A 20% 50% $ 675,000 $1,575,000 $2,812,500 675,000 562,500 B 40% 20% Overhead is absorbed based on how intensive the individual departments are considered. It has been estimated that service department usage is as follows: C $2,812,500 $1,687,500 $1,125,000 450,000 562,500 с 20% 20% Maintenance Stores $ 1,125,000 $ 900,000 $ 1,350,000 $ 1,575,000 $ 450,000 $ 1,800,000 (b) Calculate the overhead absorbed in each department. 1 Maintenance 10% Stores 20% Required: (a) Prepare a schedule to apportion the notional service cost to production and the total overheads for the production departments after apportionment. Hint: use simultaneous equations to derive the notional values. (13 marks) (12 marks) (c) Calculate the under/over absorbed overheads for each department and the entity in total. (6 marks) (d) What are the two main factors that give rise to over/under absorption of overheads? (2 marks)
Expert Answer:
Answer rating: 100% (QA)
a Schedule to apportion service department costs to production departments Service department Cost to be apportioned of apportioning A B C Total Maintenance 3214286 20 4020 642857 1285714 642857 Store... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
Students also viewed these accounting questions
-
On August 2, 30 days prior to the end of its August 31 scal year, a government issues $3 million of general obligation bonds. The proceeds are being accounted for in a capital projects fund (a...
-
Just prior to the end of the fiscal year, Climate Corporation reported the following information: Required: Complete the table below for each of the three following independent cases: Case 1: The...
-
The Sawyer Company has two service departments and two production departments. The following data are available from last year. The costs of Service Departments 1 and 2 are allocated on the basis of...
-
Zephre Company reported net income for the year of $56,000. Depreciation expense for the year was $12,000. During the year, accounts receivable increased by $4,000, inventory decreased by $6,000,...
-
What are Assets, Liabilities and owner's equity? How they differ from each other what is common in between them and what effect they have on business?
-
Are short-term unearned revenues, such as returnable deposits and advance sales, expected to be discharged with current assets in the near future? Discuss.
-
Doverdale plc has some convertible loan stock, with a current market value of 109 per 100 nominal value, on which it will pay interest at the rate of 12 per cent on their nominal value in one years...
-
Single-rate, dual-rate, and practical capacity allocation, beauty Department Store has a new promotional program that offers a free gift-wrapping service for its customers. Beautys customer-service...
-
Presented below are variable costing income statements for Diggs Company and Doggs Company. They are in the same industry, with the same net incomes, but different cost structures. Diggs Co. Doggs...
-
A slab of polymer 1.6 cm thick, originally at 30C, is heated between steel plates with a surface temperature of 70C. The density of the solid is 950 kg/m 3 , its thermal conductivity is 0.12 W/m K,...
-
Write a report on a trend in business that you've observed, and highlight at least the main finding. For example, from the rising cost of textbooks to the online approach to course content, textbooks...
-
List and describe three common interview mistakes which compromise the quality of the selection process.
-
Player I chooses a positive integer x > 0 and player II chooses a positive integer y > 0. The player with the lower number pays a dollar to the player with the higher number unless the higher number...
-
1. Distinguish between risk management and risk transfer. As the manager of XYZ FBO, what measures would you put in place to ensure risk reduction?
-
Devlop a sumary of your understanding of Learning and Retention. In the sumary, think about how you see Learning and Retention fitting into the entire study of Organizational Behavior. How does the...
-
Emani, Peters and Desai et al (2018) "conducted a cross-sectional survey of adopters and non-adopters of the portal...the survey consisted of perceived attributes from the DOI theory,...
-
I Definition 1. Should Sunshine outsource? 2. Assume Sunshine has received a special order for 12,000 units of the part from Express, Co. Express will pay Sunshine $28 per part, but will take the...
-
Element compound homogeneous mixture (heterogeneous mixture) 4) A piece of gold has a mass of 49.75 g. What should the volume be if it is pure gold? Gold has a density of 19.3 g/cm (3 points) D=m/v...
-
The questions in this exercise are based on JetBlue Airways Corporation. To answer the questions, you will need to download JetBlues 2004 10-K/A at www.hoovers.com . Once at this website, do a search...
-
Jessel Corporation bases its variable overhead performance report on the actual direct labor-hours of the period. Data concerning the most recent year that ended on December 31 are as follows:...
-
Linden Company manufactures and sells a single product. Cost data for the product follow: Variable costs per unit: Direct materials. . . . . . . . . . . . . . . . . . . . . . . . . $ 6 Direct labor ....
-
How has Treks interest in the environmental impact of its business influenced its organizational buying process?
-
What selection criteria does Trek utilize when it selects a new supplier or evaluates an existing supplier?
-
Provide an example of each of the three buying situationsstraight rebuy, modified rebuy, and new buyat Trek.
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App