JPS CC collected the following statistics in order to allocate their overheads among the various departments: Cost items Value of equipment Number of employees Floor space Material used Direct labour hours Machine hours Depreciation on equipment Rent of factory building Electricity (Factory) Protective clothing Cafeteria Production A N$15 000 Insurance Building Insurance machinery 36 400m² N$ 40 000 1 300 450 Production B N$9 000 24 300m² N$ 30 000 700 305 The following amounts represent the budgeted overheads for 2019: N$ 900 2 250 900 800 720 450 750 Service C N$6 000 20 200m² N$ 5 000 905 195
JPS CC collected the following statistics in order to allocate their overheads among the various departments: Cost items Value of equipment Number of employees Floor space Material used Direct labour hours Machine hours Depreciation on equipment Rent of factory building Electricity (Factory) Protective clothing Cafeteria Production A N$15 000 Insurance Building Insurance machinery 36 400m² N$ 40 000 1 300 450 Production B N$9 000 24 300m² N$ 30 000 700 305 The following amounts represent the budgeted overheads for 2019: N$ 900 2 250 900 800 720 450 750 Service C N$6 000 20 200m² N$ 5 000 905 195
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
100%
Required:
a. Calculate the overhead analysis of each of the two production departments for 2003.
Transcribed Image Text:Overhead allocation rates are based on labour hours, while the secondary
apportionment of the service department takes place according to machine hours.
NAGEM
rs the following
Transcribed Image Text:JPS CC collected the following statistics in order to allocate their overheads among
the various departments:
Cost items
Value of equipment
Number of employees
Floor space
Material used
Direct labour hours
Machine hours
Depreciation on equipment
Rent of factory building
Electricity (Factory)
Protective clothing
Cafeteria
Production A Production B
N$15 000
N$9 000
Insurance Building
Insurance machinery
36
400m²
N$ 40 000
1 300
450
The following amounts represent the budgeted overheads for 2019:
N$
900
2 250
900
800
24
300m²
N$ 30 000
700
305
Service C
720
450
750
N$6 000
20
200m²
N$ 5 000
905
195
Expert Solution
Step 1
The distribution of indirect expenses to manufactured goods is known as overhead allocation. The regulations of several accounting frameworks mandate it. The overhead allocation technique may be significant in many firms where the quantity of overhead to be allocated is significantly more than the direct cost of goods.
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