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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Accounting for Overheads
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
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.
Thank you Mr. John, I totally forgot about the re-apportionment in this question
You are welcome 🙂
