Prepare an overhead analysis using the following data and calculate suitable overhead absorption rates for the Milling, Assembly and Spraying departments. The data relate to one accounting period. (10 Points)
Sh. - Kenya Shilling. (please keep in Sh.)
Basic data |
||||||
Production Cost centres |
Service cost centres |
|||||
Milling |
Assembly |
Spraying |
Stores |
Maintence |
Totals |
|
No. of employees |
30 |
75 |
25 |
6 |
14 |
150 |
Labour hours |
1,510 |
3,320 |
950 |
252 |
595 |
6,627 |
Machine & Plant value (Sh.) |
225,000 |
75,000 |
45,000 |
17,000 |
85,000 |
447,000 |
Area (M2) |
7,500 |
10,000 |
3,500 |
500 |
1,000 |
22,500 |
Material requisitions |
1,400 |
300 |
250 |
550 |
2,500 |
|
Maintenance hours (Minor work) |
75 |
30 |
45 |
150 |
||
KWH (‘000) |
300 |
70 |
50 |
10 |
170 |
600 |
Machine hours |
8,400 |
1,100 |
300 |
9,800 |
||
During the period the following data were recorded: |
||||||
Sh. |
Sh. |
Sh. |
Sh. |
Sh. |
Sh. |
|
Indirect materials |
25,000 |
10,000 |
15,000 |
3,000 |
17,000 |
70,000 |
Indirect Labour |
52,500 |
25,000 |
22,500 |
42,500 |
117,500 |
260,000 |
Major Maintenance |
185,000 |
75,000 |
45,000 |
305,000 |
The following details were obtained from the accounts relating to the period.
Sh. |
|
Fire insurance |
12,500 |
Power |
45,000 |
Heating and lighting |
20,000 |
Rates |
18,000 |
Machine depreciation |
84,000 |
Machine insurance |
8,500 |
Canteen deficit |
42,500 |
Balance of maintenance costs (Excl. major works) |
175,000 |
Basic data | ||||||
Production Cost centres | Service cost centres | |||||
Milling | Assembly | Spraying | Stores | Maintence | Totals | |
No. of employees | 30 | 75 | 25 | 6 | 14 | 150 |
Labour hours | 1,510 | 3,320 | 950 | 252 | 595 | 6627 |
Machine & Plant value (Sh.) | 225,000 | 75,000 | 45,000 | 17,000 | 85,000 | 447000 |
Area (M2) | 7,500 | 10,000 | 3,500 | 500 | 1,000 | 22500 |
Material requisitions | 1,400 | 300 | 250 | 550 | 2500 | |
Maintenance hours (Minor work) | 75 | 30 | 45 | 150 | ||
KWH (‘000) | 300 | 70 | 50 | 10 | 170 | 600 |
Machine hours | 8,400 | 1,100 | 300 | 9800 | ||
During the period the following data were recorded: | ||||||
Sh. | Sh. | Sh. | Sh. | Sh. | Sh. | |
Indirect materials | 25,000 | 10,000 | 15,000 | 3,000 | 17,000 | 70000 |
Indirect Labor | 52,500 | 25,000 | 22,500 | 42,500 | 117,500 | 260000 |
Major Maintenance | 185,000 | 75,000 | 45,000 | 305000 |
COST ALLOCATION | ||||
TOTAL | Milling | Assembly | Spraying | |
Indirect materials | $ 50,000 | 25,000 | 10,000 | 15,000 |
Indirect Labor | $ 100,000 | 52,500 | 25,000 | 22,500 |
Major Maintenance | $ 305,000 | 185,000 | 75,000 | 45,000 |
$ 455,000 | $ 262,500 | $ 110,000 | $ 82,500 |
Rate per overhead | |||||||
Sh. | cost drivers | COST DRIVER FACTOR TOTAL | COST PER COST DRIVER FACTOR | Milling | Assembly | Spraying | |
Fire insurance | 12,500 | Area (M2) | 22500 | 0.56 | 4,166.67 | 5,555.56 | 1,944.44 |
Power | 45,000 | KWH (‘000) | 600 | 75.00 | 22,500.00 | 5,250.00 | 3,750.00 |
Heating and lighting | 20,000 | KWH (‘000) | 600 | 33.33 | 10,000.00 | 2,333.33 | 1,666.67 |
Rates | 18,000 | Labor hours | 6627 | 2.72 | 4,101.40 | 9,017.66 | 2,580.35 |
Machine depreciation | 84,000 | Machine & Plant value (Sh.) | 447000 | 0.19 | 42,281.88 | 14,093.96 | 8,456.38 |
Machine insurance | 8,500 | Machine & Plant value (Sh.) | 447000 | 0.02 | 4,278.52 | 1,426.17 | 855.70 |
Canteen deficit | 42,500 | No. of employees | 150 | 283.33 | 8,500.00 | 21,250.00 | 7,083.33 |
Balance of maintenance costs (Excl. major works) | 175,000 | Machine hours | 9800 | 17.86 | 150,000.00 | 19,642.86 | 5,357.14 |
405,500 | 245,828.47 | 78,569.54 | 31,694.02 |
Prepare an overhead analysis using the following data and calculate suitable overhead absorption rates for the...
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