(a) Calculate the overhead analysis of each of the two production departments for 2003 (b) Calculate the absorption rate for the production departments. (c) What causes under/over absorption rates.
(a) Calculate the overhead analysis of each of the two production departments for 2003 (b) Calculate the absorption rate for the production departments. (c) What causes under/over absorption rates.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 8P: Journalizing the distribution of service department costs to production departments
Required:
Using...
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Question
JPS CC collected the following statistics in order to allocate their
Cost items | Production A | Production B | Service C |
Value of equipment | N$ 15 000 | N$ 9 000 | N$ 6 000 |
Number of employees | 36 | 24 | 20 |
Floor space | 400m^2 | 300m^2 | 200m^2 |
Material used | N$ 40 000 | N$ 30 000 | N$ 5 000 |
Direct labour hours | 1 300 | 700 | 905 |
Machine hours | 450 | 305 | 195 |
the following amounts represent the budgeted overheads for 2019:
Depreciation on equipment | 900 |
Rent of factor building | 2 250 |
Electricity factory | 900 |
Protective clothing | 800 |
Cafeteria | 720 |
Insurance building | 450 |
Insurance machinery | 750 |
Overhead allocation rates are based on labour hours, while the secondary apportionment of the service department takes place according to machine hours.
Required:
(a) Calculate the overhead analysis of each of the two production departments for 2003
(b) Calculate the absorption rate for the production departments.
(c) What causes under/over absorption rates.
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