Question 1: SPE is a small precision engineering company with two machine shops, Machine Shop A and Machine Shop B, supported by two service departments Service Department 1 (S1) and Service Department 2 (S2).
The given information is given:
Required:
a) Prepare a statement to exhibit the total overheads for each production department, exhibiting the basis of apportionment chosen.
b) Compute an overhead absorption rate for each production department, by using the most appropriate basis of absorption.
c) Computed OAR is Rs 11. The real overheads for the machining cost center were Rs 82,681 and 7,328 machine hours were worked. Determine the amount of under or over absorbed overheads?
d) Describe in brief four differences between the financial and management accounting.