A production centre has three production departments, A, B and C. Budgeted production overhead costs for the next period

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A Production Centre Has Three Production Departments A B And C Budgeted Production Overhead Costs For The Next Period 1 (136.77 KiB) Viewed 45 times

A production centre has three production departments, A, B and C. Budgeted production overhead costs for the next period are as follows: Factory rent Equipment depreciation Insurance Heating and lighting Indirect materials: Department A Department B Department C Indirect labour: Department A Department B Department C R 60,000 80,000 20,000 18,000 7,000 6,600 9,400 Direct labour hours Number of employees Floor area (square metres) Cost of equipment (R000s) Volume (cubic metres) 40,000 27,000 20,000 Insurance costs relate mainly to health and safety insurance, and will beapportioned on the basis of the number of employees in each department. Heating and lighting costs will be apportioned on the basis of volume. Other relevant information is as follows: Total Department 18,000 50 1,200 1,000 18,000 A 8,000 20 300 200 8,000 Department B 6,000 16 400 600 6,000 Department (10 Marks) C 4,000 14 500 200 4,000 Required: a) Calculate the overhead costs for each production department. b) Calculate an overhead absorption rate for the period for each department, assuming that a separate direct labour hour absorption rate is used for each department. c) Calculate an overhead absorption rate for the period, assuming that a single factory-wide direct labour hour absorption rate is used.