REQUIRED Use the information provided below to answer the following questions: 1.1 Prepare a overhead allocation statement
Question:
REQUIRED
Use the information provided below to answer the following questions:
1.1
Prepare a overhead allocation statement using traditional costing.
(12 marks)
1.2
Calculate the allocation rate for each of the production centres, based on machine hours for Machine centres X and Y and direct labour hours for Assembly.
(3 marks)
1.3
Calculate the overheads applied to each batch of Product A.
(5 marks)
INFORMATION
Pomsun Limited has 3 production centres (Machine centre X, Machine centre Y and an Assembly centre) and 2 service centres (Materials procurement and General manufacturing support). The annual overhead costs are as follows:
R
Indirect materials:
Machine centre X
300 000
Machine centre Y
483 000
Assembly
63 000
Materials procurement
0
General manufacturing support
6 000
Indirect labour:
Machine centre X
600 000
Machine centre Y
600 000
Assembly
900 000
Materials procurement
660 000
General manufacturing support
888 000
Heating and lighting
300 000
Property tax
600 000
Insurance of machinery
90 000
Depreciation of machinery
900 000
Insurance of buildings
150 000
Salaries of works management
480 000
2
SA1
The following information is also provided:
Carrying value of machinery
Area occupied
(m2)
Number
of
employees
Direct labour hours
Machine hours
Machine centre X
R4 800 000
6 000
180
600 000
1 200 000
Machine centre Y
3 000 000
3 000
120
600 000
600 000
Assembly
600 000
9 000
180
1 200 000
Stores
300 000
9 000
60
Maintenance
300 000
3 000
60
R9 000 000
30 000
600
Total materials issues (both direct and indirect) to the production centres are as follows:
Machine centre X
R2 400 000
Machine centre Y
1 800 000
Assembly
600 000
R4 800 000
Secondary allocation: The value of materials issued is used as a basis for the materials procurement cost centre and direct labour hours as the basis for the general manufacturing support cost centre.
Product A is produced in batches of 100. Each unit spends 6 hours in the Machine centre X, 12 hours in Machine centre Y and 12 hours in the Assembly centre.
Expert Answer:
