b)Calculate appropriate overhead absorption rates for the three production departments. The following costs and relevant data, which represent normal activity levels, havebeen budgeted for the period ending 31 December 2001.CostsIndirect wagesDepreciationRatesPowerPersonnelInsuranceOther dataDirect labour hoursMachine hoursFloor area (m2)Fixed assetsEmployeesProduction DepartmentsAN$'00015BCN$'000 N$'0002187,250 9,000 15,00020,000 2,50015,5008001,2001,000N$160,00040ServiceDept.N$'00058Total2,0001,400N$'0001028422180604831,25040,0004,400N$140,000 N$30,000 N$70,000 N$400,000569450240As accounts assistant, you have been asked to assist with completing the overheadbudget for the period ending 31 December 2001.

In the below step 2 cost is overheads are allocated to various depatments as per there level of…

Answered: ac ts assistant, you have been asked to…

ac ts assistant, you have been asked to assist with completing the overnead budget for the period ending 31 December 2001.

Managerial Accounting

15th Edition

ISBN:9781337912020

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

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

Chapter8: Budgeting

Section: Chapter Questions

Problem 1BE: At the beginning of the period, the Fabricating Department budgeted direct labor of 72,000 and...

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

b) Calculate appropriate overhead absorption rates for the three production departments.

The following costs and relevant data, which represent normal activity levels, have
been budgeted for the period ending 31 December 2001.
Costs
Indirect wages
Depreciation
Rates
Power
Personnel
Insurance
Other data
Direct labour hours
Machine hours
Floor area (m2)
Fixed assets
Employees
Production Departments
A
N$'000
15
B
C
N$'000 N$'000
21
8
7,250 9,000 15,000
20,000 2,500
15,500
800
1,200
1,000
N$160,000
40
Service
Dept.
N$'000
58
Total
2,000
1,400
N$'000
102
84
22
180
60
48
31,250
40,000
4,400
N$140,000 N$30,000 N$70,000 N$400,000
56
94
50
240
As accounts assistant, you have been asked to assist with completing the overhead
budget for the period ending 31 December 2001.

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