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"