Accounting for Overheads – NBC Institute

IMAC – MAY 2021 – L1 – Q4 – Accounting for Overheads

Apportionment of service center costs to production departments and calculation of direct materials price variance.

Question

a) The summary of overheads for the three production departments and two service departments of a company have been provided below.

Department	A	B	C	S1	S2
Overheads (GH¢)	20,000	15,000	25,000	18,000	12,000

The service departmental costs are apportioned as follows:

	A	B	C	S1	S2
S1	25%	30%	35%	–	10%
S2	30%	30%	25%	15%	–

Required: Apportion the service center costs and determine the total production departments’ overheads after the apportionment. (15 marks)

b) Concrete Masters Ltd uses two main materials, Q and R, in the manufacture of its concrete blocks for sale. The materials are combined in the ratio 3:2 respectively. The following information has been extracted from the operating records of the company for the half-year ended 31 December, 2020:

Standard prices:

Material	Price (GH¢)
Q	50
R	30

Actual Results:

Material	Quantity (kg)	Total Cost (GH¢)
Q	9,000	405,000
R	8,000	256,000

Required: Compute the Direct Materials Price Variance for each material and the total for the company. (5 marks)

Answer

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Tags: Direct Materials Price Variance, Overhead Allocation, Service Department Cost Apportionment
Level: Level 1

Topic: Accounting for Overheads
Series: MAY 2021

IMAC – NOV 2020 – L1 – Q4 – Accounting for Overheads | Standard Costing and Variance Analysis

Prepare overhead analysis sheet and calculate standard costing variances for Kack Ltd.

Question

a) The following information relates to the first quarter of operations for Kack Ltd:

	Machining	Assembling	Finishing	Stores
Area occupied (sq. meters)	12,000	18,000	8,000	2,000
Plant at cost (GH¢000)	600	100	200	100
Number of employees	200	400	100	100
Direct labour hours	16,000	30,000	4,000	–
Direct wages (GH¢)	32,000	60,000	8,000	–
Machine hours	32,000	4,000	4,000	–
Number of requisitions on stores	3,000	1,000	1,000

Allocated costs:

Costs	Machining (GH¢)	Assembling (GH¢)	Finishing (GH¢)	Stores (GH¢)	Total (GH¢)
Indirect wages	16,000	15,000	14,000	10,000	55,000
Indirect materials	3,000	2,400	6,000	10,000	21,400
Maintenance	3,000	6,000	1,000	–	10,000
Power	4,000	4,000	2,000	–	10,000
Rent	6,000	9,000	4,000	1,000	20,000
Business rates	6,000	9,000	4,000	1,000	20,000
Insurance on building	6,600	9,900	4,400	1,100	22,000
Lighting and heating	7,200	10,800	4,800	1,200	24,000
Depreciation on plant	12,000	2,000	4,000	2,000	20,000
Wage-related costs	8,960	16,800	2,240	–	28,000
Factory administration	3,500	7,000	1,750	1,750	14,000
Insurance on plant	10,800	1,800	3,600	1,800	18,000
Cleaning of factory premises	3,600	5,400	2,400	600	12,000
Total	90,660	99,100	54,190	30,450	274,400

(10 marks evenly spread)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Allocation, Overhead Analysis, Standard Cost Card
Level: Level 1

Topic: Accounting for Overheads, Standard Costing and Variance Analysis
Series: NOV 2020

IMAC – MAY 2021 – L1 – Q4 – Accounting for Overheads

Apportionment of service center costs to production departments and calculation of direct materials price variance.

Question

a) The summary of overheads for the three production departments and two service departments of a company have been provided below.

Department	A	B	C	S1	S2
Overheads (GH¢)	20,000	15,000	25,000	18,000	12,000

The service departmental costs are apportioned as follows:

	A	B	C	S1	S2
S1	25%	30%	35%	–	10%
S2	30%	30%	25%	15%	–

Required: Apportion the service center costs and determine the total production departments’ overheads after the apportionment. (15 marks)

Standard prices:

Material	Price (GH¢)
Q	50
R	30

Actual Results:

Material	Quantity (kg)	Total Cost (GH¢)
Q	9,000	405,000
R	8,000	256,000

Required: Compute the Direct Materials Price Variance for each material and the total for the company. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Direct Materials Price Variance, Overhead Allocation, Service Department Cost Apportionment
Level: Level 1

Topic: Accounting for Overheads
Series: MAY 2021

IMAC – NOV 2020 – L1 – Q4 – Accounting for Overheads | Standard Costing and Variance Analysis

Prepare overhead analysis sheet and calculate standard costing variances for Kack Ltd.

Question

a) The following information relates to the first quarter of operations for Kack Ltd:

	Machining	Assembling	Finishing	Stores
Area occupied (sq. meters)	12,000	18,000	8,000	2,000
Plant at cost (GH¢000)	600	100	200	100
Number of employees	200	400	100	100
Direct labour hours	16,000	30,000	4,000	–
Direct wages (GH¢)	32,000	60,000	8,000	–
Machine hours	32,000	4,000	4,000	–
Number of requisitions on stores	3,000	1,000	1,000

Allocated costs:

Costs	Machining (GH¢)	Assembling (GH¢)	Finishing (GH¢)	Stores (GH¢)	Total (GH¢)
Indirect wages	16,000	15,000	14,000	10,000	55,000
Indirect materials	3,000	2,400	6,000	10,000	21,400
Maintenance	3,000	6,000	1,000	–	10,000
Power	4,000	4,000	2,000	–	10,000
Rent	6,000	9,000	4,000	1,000	20,000
Business rates	6,000	9,000	4,000	1,000	20,000
Insurance on building	6,600	9,900	4,400	1,100	22,000
Lighting and heating	7,200	10,800	4,800	1,200	24,000
Depreciation on plant	12,000	2,000	4,000	2,000	20,000
Wage-related costs	8,960	16,800	2,240	–	28,000
Factory administration	3,500	7,000	1,750	1,750	14,000
Insurance on plant	10,800	1,800	3,600	1,800	18,000
Cleaning of factory premises	3,600	5,400	2,400	600	12,000
Total	90,660	99,100	54,190	30,450	274,400

(10 marks evenly spread)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Allocation, Overhead Analysis, Standard Cost Card
Level: Level 1

Topic: Accounting for Overheads, Standard Costing and Variance Analysis
Series: NOV 2020

Topic: Accounting for Overheads

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IMAC – MAY 2021 – L1 – Q4 – Accounting for Overheads

Apportionment of service center costs to production departments and calculation of direct materials price variance.

IMAC – NOV 2020 – L1 – Q4 – Accounting for Overheads | Standard Costing and Variance Analysis

Prepare overhead analysis sheet and calculate standard costing variances for Kack Ltd.

IMAC – MAY 2021 – L1 – Q4 – Accounting for Overheads

Apportionment of service center costs to production departments and calculation of direct materials price variance.

IMAC – NOV 2020 – L1 – Q4 – Accounting for Overheads | Standard Costing and Variance Analysis

Prepare overhead analysis sheet and calculate standard costing variances for Kack Ltd.

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IMAC – MAY 2021 – L1 – Q4 – Accounting for Overheads

Apportionment of service center costs to production departments and calculation of direct materials price variance.

You're reporting an error for "IMAC – MAY 2021 – L1 – Q4 – Accounting for Overheads"

IMAC – NOV 2020 – L1 – Q4 – Accounting for Overheads | Standard Costing and Variance Analysis

Prepare overhead analysis sheet and calculate standard costing variances for Kack Ltd.

You're reporting an error for "IMAC – NOV 2020 – L1 – Q4 – Accounting for Overheads | Standard Costing and Variance Analysis"

IMAC – MAY 2021 – L1 – Q4 – Accounting for Overheads

Apportionment of service center costs to production departments and calculation of direct materials price variance.

You're reporting an error for "IMAC – MAY 2021 – L1 – Q4 – Accounting for Overheads"

IMAC – NOV 2020 – L1 – Q4 – Accounting for Overheads | Standard Costing and Variance Analysis

Prepare overhead analysis sheet and calculate standard costing variances for Kack Ltd.

You're reporting an error for "IMAC – NOV 2020 – L1 – Q4 – Accounting for Overheads | Standard Costing and Variance Analysis"

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