On 1 July 2007 Beidoy Ltd acquires another factory in order to expand its production capacity....

 
 

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On 1 July 2007 Beidoy Ltd acquires another factory in order to expand its production capacity. This factory has three production departments: Moulding, Assembly and Paint Shop. There is also a service department: Stores. The accountant must apportion the overheads of the factory to the three production departments. Details of the departments and the budgeted overhead expenses for the six months to 31 December 2007 together with data for Product Q are given below: Departmental statistics for six months ending 31 December 2007 Paint Shop 5 000 $20 000 20 300 Area in squire metres Machinery at cost No. of workers No. of stores requisitions Moulding 6 000 Rent Lighting & heating Insurance of premises Canteen costs $80 000 30 700 Budgeted overheads for 6 months to 31 December 2007: $ 90 000 23 000 7.000 54 000 Assembly 8 000 000 40 500 $40 Stores 1000 10 Machinery is to be depreciated at 30% per annum on cost. All workers will work 35 hours per week and there will be 24 working weeks in the six months to 31 December 2007. Product Q passes through all three departments in the course of manufacture and the time taken in each department is: Moulding 24 hours; Assembly 13 hours; Paint Shop 1½ hours. a) b) c) d) Prepare a table to show the apportionment of the factory overheads to the production departments for the six months to 31 January 2007. Calculate for each production department an hourly overhead rate. (Your calculations should be to three decimal places). Calculate the total overhead to be awarded to each unit of Product Q. If the actual overhead expenditure for the 6 months amounts to $200 000, how will the difference between this amount and the budgeted overheads be treated in the company's final accounts? State the assumptions that you make. On 1 July 2007 Beidoy Ltd acquires another factory in order to expand its production capacity. This factory has three production departments: Moulding, Assembly and Paint Shop. There is also a service department: Stores. The accountant must apportion the overheads of the factory to the three production departments. Details of the departments and the budgeted overhead expenses for the six months to 31 December 2007 together with data for Product Q are given below: Departmental statistics for six months ending 31 December 2007 Paint Shop 5 000 $20 000 20 300 Area in squire metres Machinery at cost No. of workers No. of stores requisitions Moulding 6 000 Rent Lighting & heating Insurance of premises Canteen costs $80 000 30 700 Budgeted overheads for 6 months to 31 December 2007: $ 90 000 23 000 7.000 54 000 Assembly 8 000 000 40 500 $40 Stores 1000 10 Machinery is to be depreciated at 30% per annum on cost. All workers will work 35 hours per week and there will be 24 working weeks in the six months to 31 December 2007. Product Q passes through all three departments in the course of manufacture and the time taken in each department is: Moulding 24 hours; Assembly 13 hours; Paint Shop 1½ hours. a) b) c) d) Prepare a table to show the apportionment of the factory overheads to the production departments for the six months to 31 January 2007. Calculate for each production department an hourly overhead rate. (Your calculations should be to three decimal places). Calculate the total overhead to be awarded to each unit of Product Q. If the actual overhead expenditure for the 6 months amounts to $200 000, how will the difference between this amount and the budgeted overheads be treated in the company's final accounts? State the assumptions that you make.

Answer rating: 100% (QA)

a The apportionment of the factory overheads to the production departments for the six months to 31 January 2007 can be calculated using the following formula Factory overhead allocation Departmental ... View the full answer