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

#investment appraisal techniques, #what is the formula for calculating payb...

#what is the formula for calculating payback period and what are its limitations ?

Determine growth rate, (a)  The value of a share of Rio National Equity on...

(a)  The value of a share of Rio National Equity on 31 December 2002, using the Gordon growth model and the capital asset pricing model, can be determined as follows. Required

Define elasticity - marginal cost, 1) Define Elasticity.  If you have a pro...

1) Define Elasticity.  If you have a product where elasticity is less than one, what does that mean?  Is it good, bad for the firm? 2) Why will firms not shut down as soon as th

Cvp for multiple products, CVP for Multiple Products What number of bus...

CVP for Multiple Products What number of businesses sells only one manufactured goods? The reality is that firms usually give us the diverse product line, and the individual pr

Find the amount capitalized for the patent account, Gomez incurred $350,000...

Gomez incurred $350,000 of research and development costs to develop a product for which a patent was granted on January 2, 2008. Legal fees and other costs associated with the re

Computing information, This coursework is intended to help you develop your...

This coursework is intended to help you develop your understanding of shell scripting in both a Windows and Unix environment. You should undertake this coursework in groups cons

Prepare an income statement for wadley''s car wash, Income Statement Prepar...

Income Statement Preparation The following information is taken from the records of Wadley's Car Wash for the year ended December 31, 2012. Income taxes . . . . . . . . . . .

mix and yield component variances, Describe the manner in which a material...

Describe the manner in which a materials usage variance is divided into mix and yield component variances.

.., process costing new practices

process costing new practices

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