The annual budgeted production overheads for a factory with two production departments (Machine Shop A and Machine Shop B) and one service department (Stores) are as follows:
|
Indirect wages and supervision Machine Shop A
|
£
150,000
|
£
|
|
Machine Shop B
|
100,000
|
|
|
Stores
|
30,000
|
|
|
Indirect materials
|
|
280,000
|
|
Machine Shop A
|
100,000
|
|
|
Machine Shop B
|
50,000
|
|
|
Stores
|
10,000
|
|
|
|
|
160,000
|
|
Rent
|
|
60,000
|
|
Light and heat
|
|
30,000
|
|
Insurance for machinery
|
|
20,000
|
550,000
The following information is also available:
Area occupied (sq m)
Book value of machinery (£)
Issues of direct and indirect
Machine Shop A 20,000
60,000
Machine Shop B 5,000
20,000
Stores
5,000
material from stores (£)
Budgeted machine hours
350,000 200,000
Machine Shop A 36,000 machine hours Machine Shop B 9,500 machine hours
You are required to:
(a) Determine the budgeted overhead absorption rate for Machine Shop A.
(b) Determine the budgeted overhead absorption rate for Machine Shop B.
(c) Calculate the production overheads which would be charged to Product X if the product spent 6 hours in Machine Shop A and 3 hours in Machine Shop B.