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Below are the actual overhead and actual activities for the three (3) production departments at Groceries 'R Us for the year ended August 2021. A Indirect Labour Indirect Materials Other Expenses Machine hours |Labour hours $93,750 $31,250 S62,500 6,250 31.250 $12.500 $18,750 $93.750 12,500 6,250 S18,750 S43,750 S78,125 18.750 15,625 Prior to the end of the period, the production manager provided the following budgeted information for each of the departments. The entity also has two service departments: Stores and Maintenance. The following immediately below are the budgeted data for the same period: в Maintenance Stores Indirect Labour Indirect Materials Other Expenses Labour hours |Machine hours A $93,750 $18.750 $75,000 37,500 6,250 S46,875 S15,625 S62,500 5,000 9.375 S78,125 S46,875 S31,250 12,500 15,625 $31,250 $43,750 $50,000 $25,000 $37,500 $12,500 Overhead is absorbed based on the intensity of the individual departments. It has been estimated that service department usage is as follows: A B C Maintenance Stores Maintenance Stores 5% 30% 45% 25% 15% 40% 30% 10% Required: a) Prepare a schedule to apportion the notional service cost to production and the total overheads for the production departments after apportionment. Hint: use simultaneous equations to derive the notional values. b) Calculate the overhead absorbed in each department. c) Calculate the under/over absorbed overheads for each department.

Below are the actual overhead and actual activities for the three (3) production departments at Groceries 'R Us for the year ended August 2021. A Indirect Labour Indirect Materials Other Expenses Machine hours |Labour hours $93,750 $31,250 S62,500 6,250 31.250 $12.500 $18,750 $93.750 12,500 6,250 S18,750 S43,750 S78,125 18.750 15,625 Prior to the end of the period, the production manager provided the following budgeted information for each of the departments. The entity also has two service departments: Stores and Maintenance. The following immediately below are the budgeted data for the same period: в Maintenance Stores Indirect Labour Indirect Materials Other Expenses Labour hours |Machine hours A $93,750 $18.750 $75,000 37,500 6,250 S46,875 S15,625 S62,500 5,000 9.375 S78,125 S46,875 S31,250 12,500 15,625 $31,250 $43,750 $50,000 $25,000 $37,500 $12,500 Overhead is absorbed based on the intensity of the individual departments. It has been estimated that service department usage is as follows: A B C Maintenance Stores Maintenance Stores 5% 30% 45% 25% 15% 40% 30% 10% Required: a) Prepare a schedule to apportion the notional service cost to production and the total overheads for the production departments after apportionment. Hint: use simultaneous equations to derive the notional values. b) Calculate the overhead absorbed in each department. c) Calculate the under/over absorbed overheads for each department.

Financial & Managerial Accounting
Financial & Managerial Accounting
14th Edition
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter18: Activity-Based Costing
Section: Chapter Questions
Problem 18.3APR: Activity-based and department rate product costing and product cost distortions Black and Blue...
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Question 21 Below are the actual overhead and actual activities for the three (3) production departments at Groceries 'R Us for the year ended August 2021. A B |Indirect Labour Indirect Materials Other Expenses Machine hours Labour hours $93,750 S31,250 S62,500 6,250 31,250 $12,500 $18,750 $93,750 12,500 S18,750 S43,750 S78,125 18,750 15,625 6,250 Prior to the end of the period, the production manager provided the following budgeted information for each of the departments. The entity also has two service departments: Stores and Maintenance. The following immediately below are the budgeted data for the same period: B Indirect Labour Indirect Materials Other Expenses Labour hours Machine hours $93.750 $18,750 $75,000 37,500 6,250 S46,875 S15,625 S62,500 5,000 9,375 Maintenance $25,000 $37,500 Stores $31,250 $43,750 $50,000 S78,125 S46,875 $31,250 12,500 15,625 $12,500 Overhead is absorbed based on the intensity of the individual departments. It has been estimated that service department usage is as follows: A. В Maintenance Stores Maintenance Stores 30% 40% 25% 5% 45% 30% 15% 10% Required: a) Prepare a schedule to apportion the notional service cost to production and the total overheads for the production departments after apportionment. Hint: use simultaneous equations to derive the notional values. b) Calculate the overhead absorbed in each department. c) Calculate the under/over absorbed overheads for each department.
Transcribed Image Text:Question 21 Below are the actual overhead and actual activities for the three (3) production departments at Groceries 'R Us for the year ended August 2021. A B |Indirect Labour Indirect Materials Other Expenses Machine hours Labour hours $93,750 S31,250 S62,500 6,250 31,250 $12,500 $18,750 $93,750 12,500 S18,750 S43,750 S78,125 18,750 15,625 6,250 Prior to the end of the period, the production manager provided the following budgeted information for each of the departments. The entity also has two service departments: Stores and Maintenance. The following immediately below are the budgeted data for the same period: B Indirect Labour Indirect Materials Other Expenses Labour hours Machine hours $93.750 $18,750 $75,000 37,500 6,250 S46,875 S15,625 S62,500 5,000 9,375 Maintenance $25,000 $37,500 Stores $31,250 $43,750 $50,000 S78,125 S46,875 $31,250 12,500 15,625 $12,500 Overhead is absorbed based on the intensity of the individual departments. It has been estimated that service department usage is as follows: A. В Maintenance Stores Maintenance Stores 30% 40% 25% 5% 45% 30% 15% 10% Required: a) Prepare a schedule to apportion the notional service cost to production and the total overheads for the production departments after apportionment. Hint: use simultaneous equations to derive the notional values. b) Calculate the overhead absorbed in each department. c) Calculate the under/over absorbed overheads for each department.
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