Page 176 - DCOM202_COST_ACCOUNTING_I

Cost Accounting – I

Notes The other information are:

Production Service departments
Particulars departments
A B Time- keeping Stores Maintenance
No. of Employees 40 30 20 16 10
No. of Stores Requisitions 24 20 – – 6
Machine Hours 2,400 1,600 – – –
You are required to make departmental allocation and apportionment of expenses.
Solution:

Statement of departmental Overhead distribution

Production Service department
Basis of department
Items Total (`)
Apportionment Time-
A B Stores Maintenance
keeping
Expenses Allocation 38,000 16,000 10,000 4,000 5,000 3,000
Time-keeping No. of employees 4,000 1,667 1,250 − 4,000 667 416
Expenses
Apportioned
5667
Stores Expenses No. of stores 5,667 2,720 2,267 −5,667 680
Apportioned requisitions
4,096
Maintenance Machine Hours 4,096 2,458 1,638 − 4,096
Expenses
Apportioned
Total – 22,845 15,155 – – –
Working note: The total time-keeping expenses have been apportioned over different departments
(other than time-keeping) in the ratio of number of employees in each department.

Example: Rajat company’s production costs for the year ending June 30, 2007 are given
below:

General Expenses:
Rent ` 12,500
Insurance ` 1,050
Depreciation 15% of value of machinery
power ` 3,800

Light ` 1,250
You are required to prepare an overhead analysis statement for the departments showing the
basis of apportionment, where necessary.

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