Sweet Deco Sdn Bhd, a company that manufactures antic furniture based on customers’ order. It has three production departments and two services department and the budgeted overhead costs for the coming year are as follows:

	RM
Rent and Rates	12,800
Machine insurance	6,000
Utilities expenses	3,200
Depreciation	18,00
Production Supervisor’s salaries	24,000
Heating, Lighting	6,400

Additional information:

	A	B	C	Store	Maintenance
Floor area occupied	3,000	1,800	600	600	400
Machine value (RM)	24,000	10,000	8,000	4,000	2,000
Direct Labour (hours)	3,200	1,800	1,000	-	-
Labour per hour (RM)	3.80	3.50	3.40	3.00	3.00
Allocation of overhead: Store Maintenance	50% 20%	25% 30%	25% 50%

Machine hours incurred by Department C was 4,200 hours.

Required:

1. Prepare the Overhead Analysis Sheet, shows the allocation, apportionment and reapportionment of overhead costs using suitable basis (round up the answer to two decimal place).

2. The production manager of Sweet Deco has suggested that “as the actual overheads incurred and units produced are usually different from the budgeted and as a consequence profits of each month, it would be more accurate to calculate the actual overhead cost per unit each month end by dividing the total number of all units actually produced during the month into the actual overheads incurred”.

Do you agree with the production manager’s suggestion? Provide your explanation.

Answer rating: 100% (QA)

Total Base Rate Base of allocation Floor area occupied Machine Value Direct Labor ho... View the full answer