Question 10 You are provided with the following information about Birkam plc, which has a departmental structure: Total overheads (in £000) Employee numbers Floor area (sqm) Value of machinery (in £m) Direct labour hours Assembly Finishing 475 575 100 80 10,000 10,000 15 5 200,000 100,000 A. £116,667 B. £87,500 C. £79,545 D. £175,000 Maintenance 350 20 1,000 2 Total 1,400 200 21,000 22 300,000 What proportion of the maintenance department's overheads should the finishing department absorb, assuming that overhead costs are apportioned to product cost centres using the most logical basis?
Question 10 You are provided with the following information about Birkam plc, which has a departmental structure: Total overheads (in £000) Employee numbers Floor area (sqm) Value of machinery (in £m) Direct labour hours Assembly Finishing 475 575 100 80 10,000 10,000 15 5 200,000 100,000 A. £116,667 B. £87,500 C. £79,545 D. £175,000 Maintenance 350 20 1,000 2 Total 1,400 200 21,000 22 300,000 What proportion of the maintenance department's overheads should the finishing department absorb, assuming that overhead costs are apportioned to product cost centres using the most logical basis?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Question 10
You are provided with the following information about Birkam plc, which has a departmental
structure:
Total overheads (in £000)
Employee numbers
Floor area (sqm)
Value of machinery (in £m)
Direct labour hours
Assembly
475
100
A. £116,667
B. £87,500
C. £79,545
D. £175,000
10,000
15
200,000
Finishing
575
80
10,000
5
100,000
Maintenance
350
20
1,000
2
Total
1,400
200
21,000
22
300,000
What proportion of the maintenance department's overheads should the finishing department
absorb, assuming that overhead costs are apportioned to product cost centres using the most
logical basis?
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