Reference no: EM132548573

A Limited company has two production departments V and W and three service departments; stores, maintenance and canteen. These are often denoted in their system as x, y and z respectively. Work done by stores is 50% in V, 30% in W, 10% in maintenance and 10% in canteen. Work done by maintenance is 25% in V, 60% in W, 5% in stores and 10% in canteen. Canteen work is spread equally among all the other four departments so that each gets 25%. Overhead costs allocated and apportioned to the different departments are K150,000 to V, K250,000 to W, K21,000 to stores, K15,000 to maintenance and K100,000 to canteen.

Using the algebraic method with V, W, x, y and z representing costs in each of the departments, create simultaneous equations representing the relationships and solve the following questions:

Question (a) Calculate y

Question (b) Calculate W

Question (c) Calculate V

Question (d) How much should be in production center V after the reapportionment(s) of service cost center costs to production centers?

Question (e) A bottle in the company spends 30 minutes in production center V and 15 minutes in production center W. If the company uses absorption costing and budgeted hours in W were 10,000 hours and those in V were 10,000, compute the overhead cost per bottle of sand sanitizer ( answer to 2 decimal places).

Question (f) Calculate x (answer to the nearest whole numbers only )

Question (g) Calculate z ( answer to the nearest whole numbers only)

Question (h) How much should be in production center W after the reapportionment(s) of service cost center costs to production centers?