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Accounting for Overheads

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Accounting for Overheads

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • January 27, 2022 at 6:07 am #647570
    Johanabey
    Member
    • Topics: 3
    • Replies: 2
    • ☆

    I tried working out the following question but I cannot derive the answer, Pls help me

    My working
    Since Assembly department is more machine intensive I took machine hrs as the activity level in the calculation. Therefore ($90,000/10,000=$9). This is not available as an answer

    A Company has three departments — Assembly, Finishing and Maintenance. Budgeted data for each department is shown below:
    Assembly Finishing Maintenance
    Allocated overheads $90,000 $100,000 $10,000
    Direct labour hours 5,000 6,000 Nil
    Machine hours 10,000 3,000 2,000

    Percentage of time spent
    maintaining machinery 60 40 Nil

    Number of staff 60 120 10

    What would be the most appropriate production overhead absorption rate to use in the Assembly department,
    A $9.60 per machine hour
    B $9.90 per machine hour
    C $17.33 per labour hour
    D $18.33 per Clout hour

    January 27, 2022 at 9:20 am #647584
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54671
    • ☆☆☆☆☆

    Maintenance is a service department and therefore the cost of maintenance needs re-apportion to assembly and finishing in the way that I explain in my free lectures on overheads.

    January 27, 2022 at 12:56 pm #647595
    Johanabey
    Member
    • Topics: 3
    • Replies: 2
    • ☆

    Thank you Mr. John, I totally forgot about the re-apportionment in this question

    January 27, 2022 at 5:16 pm #647615
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54671
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Accounting for Overheads’ is closed to new replies.

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