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Question 1 Study the information given below and answer the following questions: 1.1 Prepare the Overhead Allocation Statement. 1.2 1.3 Calculate the overhead allocation rate (expressed to the nearest cent) for Production Department A. Calculate the overheads applied to each unit of the product from Production Department A. (16 marks) (2 marks) (2 marks)
INFORMATION Stimvac Ltd gathered the following statistics in order to allocate their overheads among the different departments for 2022: Direct labour hours Machine hours Number of employees Floor space Value of machinery Materials used Production Department A 25 000 10 000 750 10 500m² R250 000 R650 000 Production Department B 10 000 2500 375 3 000 m² R150 000 R200 000 Service Department K 5 000 2500 125 1 500 m² R100 000 R150 000
The budgeted overheads for 2022 are as follows: Overheads Depreciation on machinery Lease of factory buildings Electricity Personnel administration Cafeteria Property tax Insurance: Machinery R 150 000 350 000 200 000 100 000 250 000 45 000 40 000 The product produced spends 3 labour hours in Department A and 2 labour hours in Department B. Overhead allocation rates are based on labour hours, while the secondary apportionment of the service department takes place according to machine hours.