You are working as a lecturer in a college. The college has different subject departments. Such...
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You are working as a lecturer in a college. The college has different subject departments. Such as Language department, Art Department, Professional Studies department, Math Department etc. Each department is considered as a cost centre. The direct costs of each cost centre are lecturer's salaries, textbooks and handouts for students. The overhead costs of the college administration are charged as a fixed percentage of teacher's salaries in the cost centre. The department heads are not happy with this method. Language department argues that it is unfair for them as there is high teacher student ratio in their department due to the need for developing different language skills. Maths department says that they should not be sharing the cost of expensive technical equipment as they use only whiteboard and marker for teaching. One member of professional studies department have a knowledge about "Different basis to apportion overheads". Departmental heads have made a list of following overheads and estimated cost and decided to meet the accountant to put some idea about using them. Individual Assignment-CMA Semester 4-Spring 2021-22 1. Heat and light 2. Cleaning and maintenance 3. Library 4. Computing services for staff 5. Computing labs for students 6. Insurance for Building Required: a) Allocate yourself a role of the head of any one of the Language department, Art Department, Professional Studies department, or Math Department. Suggest the cost driver for each of the overhead cost listed above and justify them. What are the problems of deciding the cost drivers? b) Sports World limited manufactures and sell sport equipment. It has three production departments and the budgeted overhead costs for the coming year are as follows: Rent for the factory Depreciation (machine) Supervisors' salaries (production) Heating & Lighting Floor area occupied (sq metres) Machine value Direct labour hrs budgeted Total (OMR) Choose betwee20,000-40000(in thousands 25,000 30,000 Choose between 5,000-8,000(in thousands Departments Designing Department 2000 5000 Production Department 6,000 5000 3000 Finishing Department 1000 2000 2000 (i) Prepare a statement showing the overhead cost budgeted for each department showing the basis of apportionment used. (ii) Calculate suitable overhead absorption rates You are working as a lecturer in a college. The college has different subject departments. Such as Language department, Art Department, Professional Studies department, Math Department etc. Each department is considered as a cost centre. The direct costs of each cost centre are lecturer's salaries, textbooks and handouts for students. The overhead costs of the college administration are charged as a fixed percentage of teacher's salaries in the cost centre. The department heads are not happy with this method. Language department argues that it is unfair for them as there is high teacher student ratio in their department due to the need for developing different language skills. Maths department says that they should not be sharing the cost of expensive technical equipment as they use only whiteboard and marker for teaching. One member of professional studies department have a knowledge about "Different basis to apportion overheads". Departmental heads have made a list of following overheads and estimated cost and decided to meet the accountant to put some idea about using them. Individual Assignment-CMA Semester 4-Spring 2021-22 1. Heat and light 2. Cleaning and maintenance 3. Library 4. Computing services for staff 5. Computing labs for students 6. Insurance for Building Required: a) Allocate yourself a role of the head of any one of the Language department, Art Department, Professional Studies department, or Math Department. Suggest the cost driver for each of the overhead cost listed above and justify them. What are the problems of deciding the cost drivers? b) Sports World limited manufactures and sell sport equipment. It has three production departments and the budgeted overhead costs for the coming year are as follows: Rent for the factory Depreciation (machine) Supervisors' salaries (production) Heating & Lighting Floor area occupied (sq metres) Machine value Direct labour hrs budgeted Total (OMR) Choose betwee20,000-40000(in thousands 25,000 30,000 Choose between 5,000-8,000(in thousands Departments Designing Department 2000 5000 Production Department 6,000 5000 3000 Finishing Department 1000 2000 2000 (i) Prepare a statement showing the overhead cost budgeted for each department showing the basis of apportionment used. (ii) Calculate suitable overhead absorption rates
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Related Book For
Fundamentals of corporate finance
ISBN: 978-0470876442
2nd Edition
Authors: Robert Parrino, David S. Kidwell, Thomas W. Bates
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