TUTORIAL - APPORTIONMENT QUESTION Outdoorz DAC (Outdoorz) is based in Cork and manufactures a range of...
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TUTORIAL - APPORTIONMENT QUESTION Outdoorz DAC (Outdoorz) is based in Cork and manufactures a range of garden furniture for the Irish market. The company commenced trading five years ago and its sales have increased substantially since then. The garden furniture is made from wood that has been treated to withstand Irish weather conditions. There are two production departments: Cutting and Assembly, and two support departments: Stores and Machine Maintenance. Direct materials and direct labour costs have already been identified and Outdoorz uses a traditional absorption costing system to allocate production overheads to products. The following budgeted cost information is available for the month: Total Cutting Assembly Stores Direct wages Indirect wages $ $ $ $ 371,480 83,880 201,600 39,000 69,000 21,000 15,000 15,000 Machine Maintenance $ 47,000 18,000 Power 28,360 Factory security 10,500 Factory rent and rates 36,200 Machine depreciation 6,600 Light and heat 6,240 Factory insurance 12,400 Supervisors' salaries 16,480 The company has also supplied details of its budgeted activity for the month: Total Cutting Assembly Stores Machine Maintenance Machine hours 38,600 30,880 Direct labour hours 24,000 Value of stores issues ($) 186,400 Kilowatt hours (% usage) 100 Number of employees 32 7.200 139,800 60 8 7,720 16,800 46,600 25 18 5 10 3 3 Value of machinery ($) 400,000 240,000 100,000 40,000 20,000 Floor area (square metres) 1,000 300 400 200 100 REQUIREMENT: a) On the basis of the information provided, PREPARE a schedule of the total budgeted overheads for each of the four departments, clearly showing the basis of apportionment. b) CALCULATE the total budgeted overheads for each of the production departments after the service departments have been re-apportioned. c) COMPUTE the budgeted overhead absorption rates for each of the production departments. d) At the end of the period the actual production overhead cost incurred by the Cutting department was $117,240. Actual labour hours worked in that department were 7,050 and actual machine hours recorded were 31,500. CALCULATE the under or over absorbed production overhead for the Cutting department. e) One of the company's most popular products is a garden bench and cost information relating to this product is shown below. Direct materials Direct labour hours: Cutting Assembly Machine hours Cutting Assembly $15.25 0.25 hour 0.75 hour 0.25 hour 0.25 hour CALCULATE the total product cost per garden bench. TUTORIAL - APPORTIONMENT QUESTION Outdoorz DAC (Outdoorz) is based in Cork and manufactures a range of garden furniture for the Irish market. The company commenced trading five years ago and its sales have increased substantially since then. The garden furniture is made from wood that has been treated to withstand Irish weather conditions. There are two production departments: Cutting and Assembly, and two support departments: Stores and Machine Maintenance. Direct materials and direct labour costs have already been identified and Outdoorz uses a traditional absorption costing system to allocate production overheads to products. The following budgeted cost information is available for the month: Total Cutting Assembly Stores Direct wages Indirect wages $ $ $ $ 371,480 83,880 201,600 39,000 69,000 21,000 15,000 15,000 Machine Maintenance $ 47,000 18,000 Power 28,360 Factory security 10,500 Factory rent and rates 36,200 Machine depreciation 6,600 Light and heat 6,240 Factory insurance 12,400 Supervisors' salaries 16,480 The company has also supplied details of its budgeted activity for the month: Total Cutting Assembly Stores Machine Maintenance Machine hours 38,600 30,880 Direct labour hours 24,000 Value of stores issues ($) 186,400 Kilowatt hours (% usage) 100 Number of employees 32 7.200 139,800 60 8 7,720 16,800 46,600 25 18 5 10 3 3 Value of machinery ($) 400,000 240,000 100,000 40,000 20,000 Floor area (square metres) 1,000 300 400 200 100 REQUIREMENT: a) On the basis of the information provided, PREPARE a schedule of the total budgeted overheads for each of the four departments, clearly showing the basis of apportionment. b) CALCULATE the total budgeted overheads for each of the production departments after the service departments have been re-apportioned. c) COMPUTE the budgeted overhead absorption rates for each of the production departments. d) At the end of the period the actual production overhead cost incurred by the Cutting department was $117,240. Actual labour hours worked in that department were 7,050 and actual machine hours recorded were 31,500. CALCULATE the under or over absorbed production overhead for the Cutting department. e) One of the company's most popular products is a garden bench and cost information relating to this product is shown below. Direct materials Direct labour hours: Cutting Assembly Machine hours Cutting Assembly $15.25 0.25 hour 0.75 hour 0.25 hour 0.25 hour CALCULATE the total product cost per garden bench.
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Corporate Finance and Investment decisions and strategies
ISBN: 978-1292064062
8th edition
Authors: Richard Pike, Bill Neale, Philip Linsley
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