accounting question!!!!!!!!!!1

$11.00

Description

Question 3

Lewitt PLC has asked for your help in designing their new costing system. You have

ascertained that they have two direct production departments: manufacturing and finishing,

and two production overhead departments: stores and canteen.

The allocated costs in the period are budgeted to be:

Manufacturing £360,000 Stores £120,000

Finishing £320,000 Canteen £30,000

Costs to be apportioned:

Rent on basis of floor area £26,000

Machine depreciation on basis of original cost of machinery £60,000

Management time on basis of time spent in each dept. £120,000

Floor Area Machinery Management

Sq mtrs Original cost Time

Manufacturing 300 £450,000 48%

Finishing 100 £30,000 32%

Stores 50 £5,000 5%

Canteen 70 £15,000 15%

Stores Number of

Requisitions Employees

Manufacturing 150 35

Finishing 10 25

Stores N/A N/A

Canteen 40 N/A

Budgeted machine hours in manufacturing department is 25,183

Budgeted direct labour hours in finishing department is 27,095

Required:

Calculate the overhead absorption rate for the manufacturing and finishing departments.

Reviews

There are no reviews yet.

Be the first to review “accounting question!!!!!!!!!!1”

Your email address will not be published. Required fields are marked *

accounting question!!!!!!!!!!1

$11.00

Description

Question 2 Liken PLC has asked for your help in installing their new absorption costing system. You have ascertained the following:

There are three direct production departments: cutting, machining and painting, and two support departments: stores and maintenance. Allocated costs for each department in the period are:

Cutting: £350,000 Stores: £120,000 Machining: £260,000 Maintenance: £90,000 Painting: £140,000 Costs to be apportioned: Cost Pool Cost Driver Rent £140,000 Departmental floor area Insurance £70,000 Machine value Heat and light £65,000 Departmental cubic capacity

Secondary apportionment: Stores To be calculated Stores requisites Maintenance To be calculated Maintenance call outs

Cutting Machining Painting Stores Maintenance Floor area sq ft 2,000 4,000 3,000 700 300 Machine costs 200,000 400,000 70,000 20,000 10,000 Cubic capacity cu ft 20,000 60,000 30,000 17,000 3,000 Stores requisites 4,000 1,000 2,000 ——– 795 Maintenance call outs 50 100 72 ——– —– Direct labour hours —— 18,160 27,600 ——– —– Machine hours 25,250 ——— ——- ——– —–

Required: a) Calculate the overhead absorption rate for each of the three direct production departments. b) Critically discuss the limitations and possible solutions to absorption costing.

Reviews

There are no reviews yet.

Be the first to review “accounting question!!!!!!!!!!1”

Your email address will not be published. Required fields are marked *