wilsondm

Hi everyone, here is a question that i dont have the answer and I would like to see if my answer is correct:-

a. Complete the above table 1 by using the most appropriate base.

………………………………..Total……................Machining……Assembly….....…Canteen…….....…Stores
Allocated costs……………70,022……..........…21,328…….....…29,928….....…..…8,437………...10,329
Rent and rates…………….4,641……….........….1934………........1547…….....…..…387……………773
Buildings insurance………3,713………........…1547……......…..1238………......…309……………..619
Electricity and gas………..6,800……….........…2833……….........2267………......…567……………1133
———————————
Plant depreciation……….28,390……….......18,450…….....…..8,520…….........….—………...…..1,420
Plant insurance…………….8,517……........….5535……….....….2,556……….......…—……………....426
……………………………
……………………….Total…….122,083…......…51,627…….......…46,056….....……9,700………......14,700
Apportion Canteen………………………......…..6000………......…3000…….....….(9,700)………......700
Apportion Stores…………………………......….13700………........1700……….........—…………..….(15400)
———————————-
……………………….Total…………………..........…..71,327…....……50,756

My questions: is it correct?

Should I use Area occupied as a base to allocate Rent and rates, Buildings insurance, Electricity and gas?

and, should I use Plant at cost as a base to allocate Plant depreciation and Plant insurance?

(b). Use this information to calculate a production overhead absorption rate for Machining
department and for Assembly department based on machine hours and labor hours
respectively. Round off to nearest dollars for the above table.

My questions:

How to calculate the production overhead absorption rate?

Is it

Production overhead absorption rate for Machining department:

71,327/27,200 = \$2.62/machine hour

Production overhead absorption rate for Assembly department:

50,756/18,000= \$2.82/direct labour hour

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Members online

No members online now.