- 20 Marks
MI – May 2022 – L1 – SB – Q1 – Costing Methods
Prepare an overhead analysis to allocate costs to production and service departments.
Question
A small manufacturing company has three production and two service departments. The following data were extracted from the company’s records:
| Total | Spinning & Weaving | Processing | Finishing | Maintenance | Stores | |
|---|---|---|---|---|---|---|
| Rent & Rates (₦) | 6,000,000 | |||||
| Electricity (₦) | 5,400,000 | |||||
| Canteen Exp (₦) | 420,000 | |||||
| Maintenance Exp (₦) | 2,780,000 | 2,780,000 | ||||
| Stores Expenses (₦) | 1,431,000 | 1,431,000 | ||||
| Area Occupied (Sq.m) | 12,000 | 3,500 | 2,500 | 3,000 | 2,000 | 1,000 |
| Energy Consumed (Kw/h) | 10,000 | 3,000 | 3,000 | 2,000 | 1,500 | 500 |
| No. of Employees | 120 | 40 | 20 | 30 | 20 | 10 |
| No. of Requisition | 2,700 | 600 | 500 | 790 | 800 | 10 |
| Plant Value (₦) | 55,600,000 | 25,000,000 | 15,000,000 | 15,000,000 | 600,000 | |
| Apportionment Rate 1 | 100 | 35% | 30% | 30% | 5% | |
| Apportionment Rate 2 | 100 | 25% | 20% | 30% | 25% |
You are required to prepare the overhead analysis allocating and apportioning costs to the three production departments and giving the last four digits from the reciprocal apportionment to the Spinning & Weaving department.
Find Related Questions by Tags, levels, etc.
- Tags: Costing, Departmental Costs, Overhead Allocation
- Level: Level 1
- Topic: Costing Methods
- Series: MAY 2022
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