QUESTION 4 PTS Ltd is a manufacturing company which uses three production and three service departments to make its products. It has the following overhead costs from primary distribution. Production Departments: Mixing $234,980 Assembly $345,900 Finishing $134,525 Service Departments: Stores $120,354 Accounts $238,970 Canteen $ 89,700 Other overhead costs which are yet to be distributed are as follows: $12,685,500 $ 3,450,900 $ 985,350 $ 2,890,600 $ 600,000 $ 256,000 The basis of apportioning the overheard cost is given as follows: Factory rent Business rates Heat and lighting Machinery power Depreciation Canteen subsidy Mix Ass Fin Stor Acct Can Number of employees 50 60 18 6. 12 24 Floor area occupied (m sq) 1,800 1,400 800 1000 400 600 Horse power of machine Value of machine ($'000) Overheads allocated to service departments are redistributed to the production departments as 13,000 500 6,500 200 100 400 250 30 120 50 20 30 follows: Мix Ass Fin Stores 50% 30% 20% Accounts 15% 25% 60% Canteen 25% 55% 20% Labour hours (000) Machine hours (000) Required: A. Prepare overhead analysis sheet to determine the total overhead allocated to production departments. NB: Round all figures up to the nearest whole number. 100 140 35 200 36 90 B. Calculate the overhead absorption rates using an appropriate base C. Assuming PTS manufactures two products: Mang and Banny. Mang has Assembly and 2 hours in finishing department. Banny has a direct cost of $200 and each unit direct cost of $100. It's ma uring process uses 10 hours ixing, 10 hours in requires 10 hours in Mixing, 20 hours in Assembly and 20 hours in Finishing. Calculate the manufacturing costs assigned to each unit of product.
QUESTION 4 PTS Ltd is a manufacturing company which uses three production and three service departments to make its products. It has the following overhead costs from primary distribution. Production Departments: Mixing $234,980 Assembly $345,900 Finishing $134,525 Service Departments: Stores $120,354 Accounts $238,970 Canteen $ 89,700 Other overhead costs which are yet to be distributed are as follows: $12,685,500 $ 3,450,900 $ 985,350 $ 2,890,600 $ 600,000 $ 256,000 The basis of apportioning the overheard cost is given as follows: Factory rent Business rates Heat and lighting Machinery power Depreciation Canteen subsidy Mix Ass Fin Stor Acct Can Number of employees 50 60 18 6. 12 24 Floor area occupied (m sq) 1,800 1,400 800 1000 400 600 Horse power of machine Value of machine ($'000) Overheads allocated to service departments are redistributed to the production departments as 13,000 500 6,500 200 100 400 250 30 120 50 20 30 follows: Мix Ass Fin Stores 50% 30% 20% Accounts 15% 25% 60% Canteen 25% 55% 20% Labour hours (000) Machine hours (000) Required: A. Prepare overhead analysis sheet to determine the total overhead allocated to production departments. NB: Round all figures up to the nearest whole number. 100 140 35 200 36 90 B. Calculate the overhead absorption rates using an appropriate base C. Assuming PTS manufactures two products: Mang and Banny. Mang has Assembly and 2 hours in finishing department. Banny has a direct cost of $200 and each unit direct cost of $100. It's ma uring process uses 10 hours ixing, 10 hours in requires 10 hours in Mixing, 20 hours in Assembly and 20 hours in Finishing. Calculate the manufacturing costs assigned to each unit of product.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:QUESTION 4
PTS Ltd is a manufacturing company which uses three production and three service departments
to make its products. It has the following overhead costs from primary distribution.
Production Departments:
Mixing $234,980
Assembly $345,900
Finishing $134,525
Service Departments:
Stores $120,354
Accounts $238,970
Canteen $ 89,700
Other overhead costs which are yet to be distributed are as follows:
$12,685,500
$ 3,450,900
$ 985,350
$ 2,890,600
$ 600,000
$ 256,000
The basis of apportioning the overheard cost is given as follows:
Factory rent
Business rates
Heat and lighting
Machinery power
Depreciation
Canteen subsidy
Mix
Ass
Fin
Stor
Acct
Can
Number of employees
Floor area occupied (m sq) 1,800 1,400 800
50
60
18
6.
12
24
1000
400
600
Horse power of machine
Value of machine ($'000)
13,000 500
6,500 200
100
400
250
30
120
50
20
30
Overheads allocated to service departments are redistributed to the production departments as
follows:
Мix
Ass
Fin
Stores
50%
30%
20%
Accounts
15%
25%
60%
Canteen
25%
55%
20%
Labour hours (000)
Machine hours (000)
100
140
35
200
36
90
Required:
A. Prepare overhead analysis sheet to determine the total overhead allocated to production
departments.
NB: Round all figures up to the nearest whole number.
B. Calculate the overhead absorption rates using an appropriate base
C. Assuming PTS manufactures two products: Mang and Banny.
Mang has a direct cost of $100. It's manufacturing process uses 10 hours in Mixing, 10 hours in
Assembly and 2 hours in finishing department. Banny has a direct cost of $200 and each unit
requires 10 hours in Mixing, 20 hours in Assembly and 20 hours in Finishing. Calculate the
manufacturing costs assigned to each unit of product.
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