Question

started in the Machining Department and completed in the Finishing Department. There are also two service departments, canteen and maintenance in the factory. During the priod just ended, actual overhead costs were as follows:

Total (RM)
Machining
Finishing
Canteen
Maintenance

Allocated overhead (RM)
105,000
48,750
30,000
11,250
15,000

Depreciation on equipment (RM)
31,875

Rent, rates and electricity (RM)
16,350

Additional infromation:

Background of departments:

Total (RM)
Machining
Finishing
Canteen
Maintenance

Cost of equipment (RM)
159,375
75,000
46,875
11,250
26,250

Floor area (sq meters)
8,100
2,700
1,800
1,350
2,250

Number of employees
50
20
20
5
5

Machine hours (MH)
36,900
36,900
-
-
-

Direct labour cost (RM)
40,000
4,000
36,000

The service departments overhead cost are re-apportioned as follows:
Canteen - number of employees
Maintenance - 80% for Machining department, 20% for Finishing department

Required:

Prepare overhead analysis sheet.                                                                

Answer 1

apportionment of overhead costs among service and production departments as folows:

particulars	departments	total
	machine	finishing	canteen	maintanance
overhead allocated	48750	30000	11250	15000	105000
apportioned overheads:-
depreciation	15000	9375	2250	5250	31875
rent,rates and electricity	5450	3633	2725	4542	16350
total overhead costs	69200	43008	16225	24792	153225

notes:

1) depreciation is allocated in the ratio of cost of equipment.eg: depreciation share of machine department is calculated as:31875x75000/159375=15000.

2) rent,rates and electricity are apportioned using ratio of floor area.

eg:share of rent of finishing department is calculated as follows:16350 x 1800/8100=3633

schedule of reapportionment of service department cost to production department

particulars	departments	total
	machine	finishing	canteen	maintanance
total overheads allocated	69200	43008	16225	24792
reapportonment of service dept.costs
overhead cost of canteen	8112	8113	-16225
overhead cost of maintanance	19834	4958		-24792
total overheads allocated	97146	56079	0	0

note:1) service department costs are reapportioned in accordance with the instruction of question.

2) direct labour costs are direct cost,so not considered here because of only dealing with indirect costs(overhead costs).alternatively direct labour cost also can consider here and can make apportioned among otherdepartments using ratio of number of employees,.