14.A company is preparing its production overhead budgets and determining theapportionment of these overheads to products.Cost centres expenses and related information have been budgeted as follows:Production Cost CentreMachine MachineDept A ($) Dept B ($)8,5869,1906,4008,700Indirect wagesIndirectmaterialsRentalBldg.insurancePowerAirFloor space(sq. metres)Value ofTotalconditioning3,400Machinedepreciation 40,200machineryPower78,56016,90016,700The following information is also available:(kilowatt hrs)Direct labourhrsMachine hrs2,4008,600Total MachineDept A45,00010,000$402,000 $201,000 $179,00010035,00025,200558,0007,2001112,00040Service Cost CentreAssembly Canteen Maintenance($) ($)($)6,20000015,6741,200Machine Assembly Canteen MaintenanceDept B29,650360015,000 6,00022,00020,80015,4602,000Required:(a) Prepare a statement showing the allocation and apportionment of overheads to thecost centres, showing clearly the basis of apportionment.(b) Apportion the overheads of service cost centres to production cost centres, usingappropriate bases.2

Overhead costs refers to the expenses which are not directly concerned with the production or…

company is preparing its production overhead budgets and determi portionment of these overheads to products. st centres expenses and related information have been budgeted as follows: Production Cost Centre Service Cost

company is preparing its production overhead budgets and determi portionment of these overheads to products. st centres expenses and related information have been budgeted as follows: Production Cost Centre Service Cost

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 11E: Lonsdale Inc. manufactures entry and dining room lighting fixtures. Five activities are used in...

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

14.
A company is preparing its production overhead budgets and determining the
apportionment of these overheads to products.
Cost centres expenses and related information have been budgeted as follows:
Production Cost Centre
Machine Machine
Dept A ($) Dept B ($)
8,586
9,190
6,400
8,700
Indirect wages
Indirect
materials
Rental
Bldg.
insurance
Power
Air
Floor space
(sq. metres)
Value of
Total
conditioning
3,400
Machine
depreciation 40,200
machinery
Power
78,560
16,900
16,700
The following information is also available:
(kilowatt hrs)
Direct labour
hrs
Machine hrs
2,400
8,600
Total Machine
Dept A
45,000
10,000
$402,000 $201,000 $179,000
100
35,000
25,200
55
8,000
7,200
11
12,000
40
Service Cost Centre
Assembly Canteen Maintenance
($) ($)
($)
6,200
000
15,674
1,200
Machine Assembly Canteen Maintenance
Dept B
29,650
3
600
15,000 6,000
22,000
20,800
15,460
2,000
Required:
(a) Prepare a statement showing the allocation and apportionment of overheads to the
cost centres, showing clearly the basis of apportionment.
(b) Apportion the overheads of service cost centres to production cost centres, using
appropriate bases.
2

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