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A company has established the following budgeted fixed overheads for the forthcoming period:
Heating and lighting 12’000……Bases apportionment …cubic capacity…no of employees…kWh usage
Welfare costs 7000
Power 42000
Total 61000Other information ?
Cubic capacity 6000 for Department 1
Employees (number) 20
Power(kWh usage)35000
Labour hrs 28000
Machine hrs 40000Department 2
Cubic capacity 7500
Employees 30
Power 25000
Labour hrs 48500
Machine hrs 39000Maintenance …………….
Cubic capacity 2500
Employees 6
The maintenance department splits its time between Department 1&2 on a ratio of 2:3The question is what would be the overhead absorption rate in department 1?
The answer is 0.814 /machine hr
Sir can you pls help me ya
Many thanks
Have you watched our free lectures on overhead allocation, apportionment and absorption? (The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well!)
First you need to apportion the overheads between the three departments ( 1, 2 and maintenance) on the bases given in the question.
Then you need to re-apportion the total maintenance overheads between departments 1 and 2 as per the question (2/5 to department 1 and 3/5 to department 2).
Finally you need to divide the total overheads for department 1 by the number of machine hours (40,000).
I assume you are aware that although the exam can test you on everything in this question, you can no longer be asked a full question like this because the format of the exam has changed so much since 2002.
Alright thank you sir…..i had watched the videos for this topic..
and finally i got the answer as well
once again thanks for your guidance with clear explanation as well
- The topic ‘Question from December 2002 relate to overhead’ is closed to new replies.