QUESTION 1:

PART A
Swatathon Inc. has two production departments (A and B) and two service departments (maintenance and stores). Details of next year's budgeted overheads are shown below.

                                        Total - $
Heat & light                       19,200
Repair costs                        9,600
Machinery Depreciation      54,000
Rent and rates                   38,400
Canteen                              9,000
Machinery Insurance          25,000

Details for each department are as follows:

                                             A             B     Maintenance    Stores    Total
Floor area (m²)                  6,000     4,000     3,000             2,000    15,000       
Machinery book value           48          20         8                    4            80  
Number of employees            50         40        20                  10          120

Service department's services were used as follows:

                                                    A            B        Maintenance   Stores    Total
Maintenance hou$ Worked        5,000    4,000           -               1,000    10,000
Number of stores requisition      3,000    1,000           -                   -         4,000

Required:

Create a statement to show the total overheads for each production department, showing the basis of apportionment selected.

PART B

The subsequent data relate to one year in department A.

Budgeted machine hours      25,000
Actual machine hours           21,875
Budgeted overheads         $ 350,000
Actual overheads               $ 300,000
 
Required:

Based on the given data, what is the machine hour absorption rate?

PART C

(i) Explain briefly four differences between financial and management accounting.
 
(ii) What do you understand by the term "cost centre"