Calculate an appropriate absorption rate, Cost Accounting

Assignment Help:

Three of the cost items that are included in the production overhead for a factory for a period are:

Machine maintenance labour

$33,600

Power

$26,000

Rent and rates

$39,800

Production overheads are currently absorbed using a single factory-wide rate.

It has been suggested that a separate overhead absorption rate should be calculated for each of the three groups of machines in the factory. The following additional budgeted data has been collected for the period:

 

Machine Group

Total

 

MG1

MG2

MG3

Floor area (m2)

1,600

1,400

1,000

4,000

Machine values (

000)

 

320

250

230

800

Kilowatt hours ('000)

220

110

110

440

Machine maintenance (labour  hours)

600

400

600

1,600

Number of indirect workers

4

4

2

10

Machine hours

8,200

5,600

4,900

18,700

Required

(b)   Briefly explain one reason why a separate overhead absorption rate for each machine group would be preferable to a single factory-wide rate.

(c)    Apportion each of the three items of budgeted overhead cost (machine maintenance labour, power and rent and rates) to the three machine groups.

The totals of all budgeted  production overhead cost items, allocated and apportioned to the three machine groups, are as follows:

MG1

$129,560

MG2

$107,520

MG3

$119,070

 Required

(c)    Calculate an appropriate absorption rate for each machine group.

(d)   Calculate the production overhead that would be charged to job 121which requires five hours on MG1 machines two hours on MG2 machines and three hours on MG3 machines.


Related Discussions:- Calculate an appropriate absorption rate

Stores layout and location - material handling, Stores layout and location ...

Stores layout and location - Material Handling The layout of stores must ensure as a) For movement of material, ease of access out and in of stores b) The issue of peris

Trypanosoma, Place a prepared slide of Trypunosoma under tlic microscope an...

Place a prepared slide of Trypunosoma under tlic microscope and focus it under low power, You will observe large number of tiny spindle-shaped trypanosomes lying in the plasma alll

Production needs in inventory for component a, Kenner company produces two ...

Kenner company produces two products: SR200 and TX500. Budged sales for four months are as follows; SR200 TX500 May 8,000 20,000 June 13,000 32,000 July 11,000 39,000 August 18,000

306, creating a decision treeplan

creating a decision treeplan.

Costs of the service departments, Bull Bay Ltd. Manufacturers two types of ...

Bull Bay Ltd. Manufacturers two types of surfboard, "Winner" and "Surf King", whose selling prices are $300 and $900 respectively. Each surfboard passes through two manufacturing d

Important aspect regarding to service cost centres, Important Aspect Regard...

Important Aspect Regarding to Service Cost Centres The basis selected should be one that is judged to be the mainly equitable way of sharing the service costs of department

Calculate the moderate earnings per share, A listed entity, had 3,000,000 $...

A listed entity, had 3,000,000 $1 ordinary shares in issue, On 1 January 2009 CSA.CSA made a bonus issue of 1 for 3, On 1 May 2009. CSA issued 2,000,000 $1 ordinary shares for $3.2

Contract account, i want to understand everything about contract account

i want to understand everything about contract account

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd