MANUFACTURING OVERHEADS Thumamina Limited manufactures various products that are produced in two production departments: Department Q and Department V. In addition to these two production departments, the company has a service department, which provides support to the production departments. The following additional information is available: Department Q Department V Service department Number of employees 150 100 80 Floor space 2 050 m? 1 250 m2 1 100 m2 Value of machinery R900 000 R300 000 R250 000 Kilowatt hours 1 300 1 000 400 Labour hours 5 000 4 000 150 Machine hours 4 000 2 000 100 The budgeted manufacturing overheads for 2018 are as follows: Rent of building R1 010 000 Electricity R95 000 Depreciation of machinery (based on machine hours) R230 000 Salaries of supervisors R380 500 Insurance buildings (based on value of machinery) R150 755 Indirect material: Department Q R88 000 Department V R35 000 Service department R27 000 Required: Calculate the primary allocation of overheads per department as well as the secondary allocation per production department. The secondary allocation is done based on machine hours. Note: Round off all amounts to the nearest

MANUFACTURING OVERHEADS Thumamina Limited manufactures various products that are produced in two production departments: Department Q and Department V. In addition to these two production departments, the company has a service department, which provides support to the production departments. The following additional information is available: Department Q Department V Service department Number of employees 150 100 80 Floor space 2 050 m? 1 250 m2 1 100 m2 Value of machinery R900 000 R300 000 R250 000 Kilowatt hours 1 300 1 000 400 Labour hours 5 000 4 000 150 Machine hours 4 000 2 000 100 The budgeted manufacturing overheads for 2018 are as follows: Rent of building R1 010 000 Electricity R95 000 Depreciation of machinery (based on machine hours) R230 000 Salaries of supervisors R380 500 Insurance buildings (based on value of machinery) R150 755 Indirect material: Department Q R88 000 Department V R35 000 Service department R27 000 Required: Calculate the primary allocation of overheads per department as well as the secondary allocation per production department. The secondary allocation is done based on machine hours. Note: Round off all amounts to the nearest

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required Information The following information applies to the questions displayed below.] Cane Company manufactures two products called Alpha and Beta that sell for $225 and $175, respectively. Each product uses only one type of raw material that costs $6 per pound. The company has the capacity to annually produce 130,000 units of each product Its average cost per unit for each product at this level of activity are given below. Beta $24 32 Direct materials Direct labor Variable manufacturing overhead Traceable fFixed manufacturing overhead Variable selling expenses Common fixed expenses %2442 42 34 31. Total cost per unit $173 607$ The company considers its traceable fixed manufacturing overhead to be avoidable, whereas its common fixed expenses are unavoidable and have been allocated to products based on sales dollars. Assume that Cane normally produces and sells 59,000 Betas per year. What is the financial advantage (disadvantage) of iscontinuing the Beta product line? o search 近

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