Prepare a statement showing the total overhead cost:- (i) for each production department and (ii) per unit, within each department
Prepare a statement showing the total overhead cost:- (i) for each production department and (ii) per unit, within each department
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
LOVE Limited operates activity based costing and activity based budgeting systems.
The following information has been provided in respect of three separate production departments:
| Dept. 1 | Dept. 2 | Dept.3 | Total | |
| Budgeted production units | 20 000 | 10 000 | 15 000 | 45 000 |
| number of repair hours | 6 000 | 1 400 | 5 200 | 12 600 |
| number of orders issued | 500 | 1000 | 800 | 2 300 |
| Machine hours | 400 000 | 300 000 | 200 000 | 900 000 |
Production
| N$ | |
| Machining | 1 755 000 |
| Stores | 632 500 |
| Quality assurance | 405 000 |
| Maintenance | 378 000 |
Prepare a statement showing the total overhead cost:-
(i) for each production department and
(ii) per unit, within each department
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