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

Current overhead cost allocation system, Sam Edwards has been the accountin...

Sam Edwards has been the accounting manager for Jade Manufacturing in a highly competitive international market for ten years. Jade Manufacturing produces heavy equipment for two m

The cost cycle - double entry system, entries to be entered into a ledger a...

entries to be entered into a ledger account for the month of July 2009 & prepare an incoem statement. balances at 1/7/2009 Materials control $6150 Labour control (accrued wages)

Standards and budgets, Standards and Budgets Budgets like you recall f...

Standards and Budgets Budgets like you recall from the previous section, are simply plans for expected future performance expressed in quantified monetary terms. Therefore the

Cash cycle, The Cash Cycle: so as to deal with the problem of cash managem...

The Cash Cycle: so as to deal with the problem of cash management we should have a concept about the flow of cash by a firm's accounts. The entire process of such cash flow is ide

Determine the net book value, NSC Ltd. has a 31 May fiscal year-end. NSC di...

NSC Ltd. has a 31 May fiscal year-end. NSC disposed of its Information Systems Group (ISG) on 31 January 20X3. ISG had a net loss (after taxes) of $37,700,000 in 20X3, to the date

Cost, please concept clear me cost accounting for example, we manufacturing...

please concept clear me cost accounting for example, we manufacturing any product

Calculate the total direct labor cost & labor wage rate, Peter Coffin and P...

Peter Coffin and Paul Bearer own The Grave Undertaking, Inc. and their firm uses a predetermined overhead rate to apply overhead to the production of custom-built coffins.  They us

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

Cretae trial balance in t-accounts, Chrome-It, Inc., manufactures special c...

Chrome-It, Inc., manufactures special chromed parts made to the order and specifications of the customer.  It has two production departments, stamping and plating, and two service

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

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