PAGE 13

-
-

Aluko Limited manufactures three products for the automobile industry, BS100, BS200 and
BS300.
Production Pro .
Ser Ser
The business is divided into four departments – machining, assembly, stores and canteen.
= =

The following information is available for one unit of the three products.

BS100 BS200 BS300

Direct materials $12.60 $14.10 $18.80

Direct labour hours – machining ($7.80 per hour) 30 minutes 50 minutes 55 minutes

Direct labour hours – assembly ($6.30 per hour) 10 minutes 12 minutes 15 minutes

Machine hours – machining 20 minutes 30 minutes 30 minutes

Machine hours – assembly 5 minutes 5 minutes 10 minutes

The total estimated overhead costs for the year ended 30 June 2015 are as follows:

Indirect wages [ Ho -

of Employees ] 232 000 39961-+145^25

Machinery maintenance [ ]
Mach HR 94 000 6300+1300

Machinery insurance [ value of Mach ) 9 020

Rent and rates ( Floor Area ] 49 600

Buildings insurance [ Floor area] 12 800

Machinery depreciation ↳ alueofmch) .

26 600

The following information is also available.

Machining Assembly Stores Canteen

Number of indirect employees 8 16 4 2

Floor area (sq metres) 8 000 9 000 2 000 1 000

Value of machinery ($000) -

290 120
-
-

Number of orders from stores 6 300 1 300

Budgeted labour hours 7 720 28 600

Budgeted machine hours 46 400 3 200

Use of canteen 30% 55% 15%

 Me
statement to calculate Job order of 250 units CBS 2001 0

$ $
Material [ 14.10×250 United 3525

Labour :

machining [ 250 (7.80×50/60) 1625

Assembly 2250 ✗
6-30×12/60] 315
units .

OVERHEADS [OAR]

Machining : 9250m¥ ✗ 3%0^5.14 M☒← 643

Assembly :[250 wits ✗ ' 460×6.48 HIR -
3224

Cost 6432
SAIES 9=895
Profit # . 3463

[BARA Bhai]
GP Emarqinl GP 35%
6432=9895
= =

SALES SAVES
wife 100
✗ cost -_
100 -

35

EP9maruuPJ-GPT.ehotngloe.to/-en-ie--s
Bhat
wife
 PAGE 14

REQUIRED

(a) Apportion the costs to the four departments and re-apportion the service departments’ costs

Few
to production departments using a suitable basis.
Production Production Sen .

Total Machining Assembly Stores Canteen

$ $ $ $ $

Indirect wages 232000 61867 123733 30933 15461

Machinery maintenance 94000 879356065 -
-

Machinery insurance 9020 6380 2640 -

-

Rent and rates 49600 19840 22320 4960 2480

Buildings insurance 12800 5120 5760 1280 640

Machinery depreciation 26600 18815 7785 - -

- - -

TOTAL overheads .

.
199957 168303 37173 18587

Reapportionment of canteen 5576 10223 2788

( 8587)
30-550/0-1540 .

(399-61) nice
6300 = _-

&
Reapportionment of stores [5-25] 33126 6835 NIL NTL
Budgeted overheads -238659 -185361
.

1300
.
- -

✓ ✓ [8]

(b) Calculate appropriate absorption rates for each production department correct to two
decimal places.

6300+1300=45^25 / order
[4]

Additional information
3996£ Store
-

The actual results for the year were as follows:

Factory overheads→
Direct labour hours
Machining

$239 110

8 420
Assembly

$192 860

28 150

Direct machine hours 49 120 3 050

REQUIRED

(c) Calculate the under or over absorption of overheads for each production department.

Machining

Assembly
[4]
 calculation of over hander - Absorbed : -

[ Machining ] 49120
]
5.14 OAR ✗ Actual machine HRS =
252477 A
[Absorbed
239110 [ Actual
overheads]
OVER
-
ABSORB 131367

Assembly :
28150 HRS
$6.48
OAR GABI ✗ Actual labour HRS = 182412h [ Absorbed ]
192860 factual overhead]
under - Absorbed A 10448
 {OARS
-

Machining :
Budgeted overheads
Budgeted machine HRs .

* & 238659 = $5.14 / Machine HRS

46400 Machine HRs

Assembly : $185361 =
$6.48 f lab HRs .

'
28600 lab 11-126

[Machining}
calculation of over & under -
Absorbed :
- &

$5.14 OAR ✗ Actual Machine HRs → .

252477 [ Absorbed I :

49120 [ machine [ Actual oveiht

'

ARS
-239110
.

over - absorbed .
13367 .

{ Absently } 28150 '

[Absorbed I
26.4 AR ✗ Actual labour ARS =
182412 .

192860 [ Actual overhead]

→
.

Under -
Absorbed 10448
indirect wages

temp
°
indirect wages = 232000 = $
- -

3
'

Ho of
Employees 8 tic t U t -
-

machining Ass stores canteen

machinery maintenance =
-
$94000 =
& 235 Pee AR
-

Machine HRS 464001-3200 124

Machinery t
Assembly .

Machine
-
insurance =

-
$9020 =
811500 .

1201000
of machine 2901000 t
value
Machinery t Assembly .

-
Rent Skates =
-
49600 = $2.48 Crea]
floor Area
8000+9000+2000+1000
Machinery t Absent stores + canteen

$0.64
-
Building insurance =
-
izsoo =

floor Area 8000+9000+2000+1000

Machination
Valve of
machinery
=
2616002
2901000 t 1201000
.
= $-133
2050 -

frame
-
STORE lost =
& 39961 $5.25
-

No orders Per order

of 6300+1300
.

OVER HEAD Rates For Production deg

Absorption
-

Machining --
Budgeted overheads

Budgett Rs
$238659 = & 5 'M Pee Mach HR

-46400
-

MAHR

Assembly : Budgeted overheads

Budgets
"
$185361 = & 6. Us Pee lab HR

2867 lab HR
=

Machining :
a
OAK × Actual machine HR= 252476 [Absorbed]
5.14 A 49120 = 239110 [Aural ]
over absorbed .
-13366
←
=

Assembly
OTR in Actual labour hrs --
182412k [Absorbed ]
$6.48 K 28150 192860 [Aelita ]
under - absorbed
=
 JOB ORDER [ 250 units] : BS 200

MATERIAL

[ $14.101 unit x 250 units] 3525

LABOUR
HRS

::::E :L:* ::::÷:::i¥

] 1625

..

OVERHEAS
PARIS
$5141 machine ARK 3460 xz5ovnitsJ= 642.5
Ma:{ehimnbey {$6.48 flab Hex 12/60 A 250 United 324
Total lost 6431.5 .