I just need the answer for the question 3.4 and A B in the second page tion IM 3
ID: 2337467 • Letter: I
Question
I just need the answer for the question 3.4 and A B in the second page
tion IM 3.3(a) Specify and explain the factors to be considered in determining whether to uti- lizera single factory-wide recovery rate for all production overheads or a sepa rate rate for each cost centre, production or service departiment(12 marks) b) Describe three methods of determining fixed overhead recovery rates an specily the circumstances undet which each method is superior to the other (8 marks) Total 20 marks) ACCA P2 Management Accounting nediate methods mentioned lon IM3.4 A company makes a range of products with total budgeted manufacturing over- heads of 8973 560 incurred in three production departments (A, B and C) and one ate ead is sevice departnrient. Department A has 10 direct employees, who each work 37 hours per week ation of Department B has fve machines each or which is operated for 24 hours ad rate and per week ed chareed it of output period The company will operate for 48 weks in the budget period. Budgeted overheads ineurred directily by each department are Production demarimient Productim department Produationt departmant Service department mae oned to departnents as folos Production department A vice dpatwenExplanation / Answer
3.4
A) Calculate an appropriate predetermined overhead absorbtion rate in each production department.
= 23,68 per direct labor Hr
=63,89 per M/C Hr
= 1,25 per Hr
Calculations:
C1: Indirect cost
Total Indirect cost = Total Budgeted manufacturing OH - Total Budgeted OH incurred directly = $ 973,560 - $ 635,060 = $ 338,500 And then the Total Indirect cost ($ 338,500) is apportioned to each departments
(A - 40%, B - 35%, C - 25%, Service Department - 5%)
C2: Service Department
Appointment = (53305 + 16925) * 1/3
= $ 23,410
C3: Department A direct labour hours
= 10 * 37 * 48
= 17,760
Department B Machine (M/C) hours
= 5 * 24 * 48
= 5,760
Department C units
= 148,000
B) Calculate the manufacturing overhead cost per unit of finished product ina batch of 100 unitts which take 9 labor hours in department A and three machine hours in department B to produce.
Dep A
9 Labor hours at $ 23, 68
21,312
Dep B
3 M/C hours at $ 63,89
19,167
Dep C
100 units at $ 125
12,500
Total Cost
52,979
Cost per unit = $ 530 (52,979 / 100)
Thank You!!
Production Department Service Department Total A B C Direct 261745 226120 93890 53305 635060 Indirect (C1) 135400 118475 67700 16925 338500 Service DepartmentAppointment (C2) 23410 23410 23410 -70230 420555 368005 185000 973560 Allocation base (C3) 17760 5760 148000