The following costs and relevant data which represent normal activity level have been budgeted for the period ending 31 December 2001. Costs Production Department A Production Department B Production Department C Service Department Total N$'000 N$'000 N$'000 N$'000 N$'000 Indirect wages 15 21 8 58 102 Depreciation 84 Rates
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The following costs and relevant data which represent normal activity level have been budgeted for the period ending 31 December 2001.
| Costs | Production Department A | Production Department B | Production Department C | Service Department | Total |
| N$'000 | N$'000 | N$'000 | N$'000 | N$'000 | |
| Indirect wages | 15 | 21 | 8 | 58 | 102 |
| 84 | |||||
| Rates | 22 | ||||
| Power | 180 | ||||
| Personnel | 60 | ||||
| Insurance | 48 | ||||
| Other data: | |||||
| Direct labour hours | 7250 | 9000 | 15000 | 31250 | |
| Machine hours | 15500 | 20000 | 2500 | 2000 | 40000 |
| Floor area(m^2) | 800 | 1200 | 1000 | 1400 | 4400 |
| Fixed assets | N$160 000 | N$140 000 | N$30 000 | N$70 000 | N$400 000 |
| Employees | 40 | 56 | 94 | 50 | 240 |
As accounts assistant you have been asked to assist with completing the
Required:
(a) Prepare an overhead analysis sheet which demonstrates the cost of the three production departments.
(b) Calculate appropriate overhead absorption rates for the three production departments
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