Question

The Accountant for APC Manufacturing Pty Ltd, a manufacturer of Sports Wear has accumulated the following information related to the anticipated overhead costs for the coming year. Factory Office Stores Assembly Finishing Total $60,000 $15,000 $80,000 $200,000 Dept Overhead $45,000 Departmental Information $15,000 $270,000 $400,000 $35,000 $80,000 300m Plant values 500m Floor space 100m 200m 1,100m 100 Requisitions 60 40 No. of 22 55 33 110 employees Direct labour 2,000 6,000 8,000 hours Machine hours 12,650 2,350 15,000 The firm uses the direct method for re-allocation of service department Factory Office and Stores) costs to production departments [Assembly and Finishingl. The fectory office would be realloceted to production departments according to the service rendered to production departments as measured by the number of employees in each production department. The stores would be reallocated to production departments according to the service rendered to production departments as measured by the number of materials requisitions in each production department Required a. Determine department overheed rates based on lil Machine hours for Assembly and lii Direct Labour hours for Finishing. Show all the workings in your enswers. IHints: You can use the following table to answer this part of question.) b. Compute a plant wide overhead rate based on Direct Labour hours. Show all the workings in your answers [Hints: Read Examples 13 to 16 on your workbook (10 marks) (2 marks) Assembly Finishing Office Stores Total $45,000 $60,000 $15,000 $200,000 Dept overheed $80,000 Reallocate Office Reallocate Stores Totel Driver Department overhead rates

Answer 1

a	Determination of Department overhead rates based on machine hours for Assembly and Direct labor hours for Finishing:-
		Assembly	Finishing	Factory Office	Stores	Total
	Dept Overhead	$          80,000	$          45,000	$               60,000	$         15,000	$    200,000
	Reallocate Office (See WN-1)	$          30,000	$          18,000	$              (60,000)	$         12,000
	Reallocate Stores (See WN-2)	$          16,200	$          10,800	$                        -	$ (27,000)
	Total	$       126,200	$          73,800	$                        -	$ -	$    200,000
	Driver	12650	6000
	Department Overhead Rates	$              9.98	$            12.30
WN-1	Reallocation of Office Overhead of $60000
	Department	No. of Employees	Per Employee = $60000/110	Cost Distributed
		a	b	c = a*b
	Assembly	55	$          545.45	$               30,000
	Finishing	33	$          545.45	$               18,000
	Stores	22	$          545.45	$               12,000
	Total	110		$               60,000
WN-2	Reallocation of Store Overhead of 15000+12000 (allocated from office) =$27000
	Department	No. of Requisitions	Per Requisition = $27000/100	Cost Distributed
		a	b	c = a*b
	Assembly	60	$          270.00	$               16,200
	Finishing	40	$          270.00	$               10,800
	Total	100		$               27,000
b	Computation of Plantwide overhead rate based on direct labor hours:-
a	Total overhead	$       200,000
b	Total Direct labor hours	8,000
c	Plantwide overhead rate (a/b)	$            25.00

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