Page 141 - F2 - MA Integrated Workbook STUDENT 2018-19
P. 141
Accounting for overheads
Example 1
SB Ltd has four departments – Assembly, Finishing, Maintenance and
Canteen. The following costs are expected to be incurred.
$
Indirect materials 20,000
Rent 15,000
Electricity 10,000
Machine depreciation 5,000
Building maintenance 10,000
Information on the departments (Basis of apportionment)
Assembly Finishing Maintenance Canteen Total
Area (sq m) 1,000 2,000 500 500 4,000
Kw hours 1,000 4,000 Nil 5,000 10,000
consumed
Machine value $45,000 $35,000 $11,000 $9,000 $100,000
Indirect $7,000 $8,000 $3,000 $2,000 $20,000
materials
consumed
You are required to complete the table (to the nearest $) to allocate and
apportion the overheads in each cost centre. Overheads can be apportioned
in 2 ways:
Overhead for department = total overhead ÷ total of chosen basis × basis for
that department
OR
Convert the chosen basis into percentages and then calculate the % of the
overhead.
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