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Zany Plastics Ltd, is a large plastics production company located in Dunedin. Due to the Covid-19 pandemic, it has diverted all its production in the last 6 months (January - June 2020) to the fabrication of personal protective plastic face shields. These shields are fabricated in one department, detailed with clips and other attachments and stickers in a second department and disinfected and packed in the third department. Zany Plastics Ltd uses normal costing and a plant-wide (single) overhead allocation rate based on direct wages cost. As the shields require more complicated machine fabrication than Zany's usual products, the management accountant Lucas Turner has suggested that departmental overhead allocation rates would result in more accurate job costs. Exhibit 1 displays the budgeted and actual data for the previous 6 months. Exhibit 1 Budgeted and actual data for January - June 2020 Direct wages Direct labour Machine hours Department Production ($000s) hours overheads ($000s) Budgeted Fabrication 500 10,000 40,000 1,200 Detailing Packing 2,000 50,000 10,000 300 500 25,000 750 Actual Fabrication 600 12,000 45,000 1,300 Detailing Packing 1,600 45,000 14,000 280 600 30,000 800

Zany Plastics Ltd, is a large plastics production company located in Dunedin. Due to the Covid-19 pandemic, it has diverted all its production in the last 6 months (January - June 2020) to the fabrication of personal protective plastic face shields. These shields are fabricated in one department, detailed with clips and other attachments and stickers in a second department and disinfected and packed in the third department. Zany Plastics Ltd uses normal costing and a plant-wide (single) overhead allocation rate based on direct wages cost. As the shields require more complicated machine fabrication than Zany's usual products, the management accountant Lucas Turner has suggested that departmental overhead allocation rates would result in more accurate job costs. Exhibit 1 displays the budgeted and actual data for the previous 6 months. Exhibit 1 Budgeted and actual data for January - June 2020 Direct wages Direct labour Machine hours Department Production ($000s) hours overheads ($000s) Budgeted Fabrication 500 10,000 40,000 1,200 Detailing Packing 2,000 50,000 10,000 300 500 25,000 750 Actual Fabrication 600 12,000 45,000 1,300 Detailing Packing 1,600 45,000 14,000 280 600 30,000 800

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Zany Plastics Ltd, is a large plastics production company located in Dunedin. Due to the Covid-19 pandemic, it has diverted all its production in the last 6 months (January - June 2020) to the fabrication of personal protective plastic face shields. These shields are fabricated in one department, detailed with clips and other attachments and stickers in a second department and disinfected and packed in the third department. Zany Plastics Ltd uses normal costing and a plant-wide (single) overhead allocation rate based on direct wages cost. As the shields require more complicated machine fabrication than Zany's usual products, the management accountant Lucas Turner has suggested that departmental overhead allocation rates would result in more accurate job costs. Exhibit 1 displays the budgeted and actual data for the previous 6 months. Exhibit 1 Budgeted and actual data for January - June 2020 Direct wages Direct labour Machine hours Department Production ($000s) hours overheads ($000s) Budgeted Fabrication 500 10,000 40,000 1,200 Detailing Packing 2,000 50,000 10,000 300 500 25,000 750 Actual Fabrication 600 12,000 45,000 1,300 Detailing Packing 1,600 45,000 14,000 280 600 30,000 800
Transcribed Image Text:Zany Plastics Ltd, is a large plastics production company located in Dunedin. Due to the Covid-19 pandemic, it has diverted all its production in the last 6 months (January - June 2020) to the fabrication of personal protective plastic face shields. These shields are fabricated in one department, detailed with clips and other attachments and stickers in a second department and disinfected and packed in the third department. Zany Plastics Ltd uses normal costing and a plant-wide (single) overhead allocation rate based on direct wages cost. As the shields require more complicated machine fabrication than Zany's usual products, the management accountant Lucas Turner has suggested that departmental overhead allocation rates would result in more accurate job costs. Exhibit 1 displays the budgeted and actual data for the previous 6 months. Exhibit 1 Budgeted and actual data for January - June 2020 Direct wages Direct labour Machine hours Department Production ($000s) hours overheads ($000s) Budgeted Fabrication 500 10,000 40,000 1,200 Detailing Packing 2,000 50,000 10,000 300 500 25,000 750 Actual Fabrication 600 12,000 45,000 1,300 Detailing Packing 1,600 45,000 14,000 280 600 30,000 800
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