Question

Question 3 30 Marks Chineke Ltd has two production cost centers: Assembly and Cutting, and one service cost center Human resources. The following budgeted information was supplied for the next financial pernod Budgeted overhead Building repairs Cafeteria cost Factory item Cost lighting N$130 000 Maintenance of machine N$48 000 N$60 000 N$44 000 Additional information: Numbers Estimated CubicEstimated Value of Estimated employees hours Departments of labour capacity machine Buildings labour cost Human resour Assembly Cutting 20 50 140 2000 1000 1 760 oul 1 000 4 000 5 000 N$ 200 000 100 000 250 000 N$ 5 000 2 000 3 000 1 500 4 400 2 240 Other allocated overheads: Indirect materials Depreciation Departments Human resources Assembly Cutting N$18 200 N$20 000 N$24 300 N$6 000 N$6 000 N$6 000 You were further provided with the following actual overheads for the department Assemb N$ 95 500 N$ 202 200 7 000 Actual overheads Actual machine hours 6 000

Answer 1

(A) Overhead Worksheet Analysis showing the allocation of all overheads:

Items	Basis of Allocation	Human Resources	Assembly	Cutting	Total
Budgeted Overheads:
Building Repairs	Value of Buildings	$21,818	$10,909	$27,273	$60,000
Cafeteria Cost	Number of Employees	$4,190	$10,477	$29,333	$44,000
Factory Lighting*	Value of Buildings*	$47,273	$23,636	$59,091	$130,000
Maintenance of Machine	Machine Hours	$4,800	$19,200	$24,000	$48,000
Other Overheads:
Indirect Materials	Allocation	$18,200	$20,000	$24,300	$62,500
Depreciation	Allocation	$6,000	$6,000	$6,000	$18,000
Actual Overheads	Actual	$0	$95,500	$202,200	$297,700

* Factory lighting cost may be allocated on the basis of area occupied by each department within factory or number of lights within each department. In the absence of this information, the factory lighting cost is allocated on the basis of value of buildings.