Chancer plc has two departments through which work passes. Costs are related to these departments and...
Chancer plc has two departments through which work passes. Costs are related to these departments and overheads are charged to jobs on the basis of departmental direct wages percentage. Expenses for the year and other related information are as follows:
| Budgeted overheads | Actual overheads | |||||
| £ | £ | |||||
| Rent and rates | 40,000 | Department 1 | 92,500 | |||
| Insurance of plant | 12,000 | Department 2 | 70,100 | |||
| Canteen costs | 12,000 | |||||
| Heat and light | 3,000 | |||||
| Material handling costs | 25,000 | |||||
| Xmas dance | 8,000 | Actual direct wages | ||||
| Depreciation of plant | 18,000 | |||||
| Factory security | 6,000 | Department 1 | 240,000 | |||
| Repairs – Dept.1 | 2,000 | Department 2 | 180,000 | |||
| Dept. 2 | 1,000 | |||||
| Supervisor’s costs | 20,000 | |||||
Other budgeted information
| Department 1 | Department 2 | ||
| Floor space | 70% | 30% | |
| Plant value | £80,000 | £40,000 | |
| Number of operators | 30 | 50 | |
| Material used | £150,000 | £350,000 | |
| Direct wages | £236,400 | £170,500 |
Required:
-
Calculate the departmental overhead absorption rate.
-
Calculate the total cost of Job 36 using the following direct costs:
Material 150 kilos of A @ £3.50 per kilo 46 litres of B @ £6.25 per litre Labour Dept. 1 80 hours @ £5.50 per hour Dept. 2 120 hours @ £7.50 per hour -
Calculate the over/under-absorption for the year, by department, and in total for Chancer plc.
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