Page 177 - DCOM202_COST_ACCOUNTING_I

Unit 8: Overheads

Solution: Notes

Statement of Overhead Analysis for Year Ending June 30, 2007
Production departments Service departments
Basis of Work- Total
Items P1 P2 P3 Office Stores
Apportionment shop (`)
(`) (`) (`) (`) (`)
(`)
Indirect Direct 2,000 3,000 3,000 1,000 2,000 2,000 13,000
Materials
Indirect Direct 3,000 3,000 4,000 10,000 10,000 5,000 35,000
Wages
Rent Area 2,000 2,500 3,000 1,500 1,000 2,500 12,500
Insurance Value of Machine 300 350 250 – – 150 1,050
Depreciation Value of Machine 4,500 5,250 3,750 – – 2,250 15,750
power H.p. of Machine 877 1,169 1,462 – – 292 3,800
Light Area 200 250 300 150 100 250 1,250
Total 12,877 15,519 15,762 12,650 13,100 12,442 82,350
Overheads
Workshop Machine Hours 2,765 5,530 4,147 – – (–) –
Overhead 12,442
Apportioned
Stores Direct Materials 3,573 4,168 5,359 – (–) – –
Overhead 13,100
Apportioned
Office Direct Wages 3,373 4,217 5,060 (–) – – –
Overheads 12,650
Apportioned
Total 22,588 29,434 30,328 – – – –
Overheads of
production
Departments

Task In a factory, the average annual charges for direct wages amount to ` 2,40,000. The
following are some of the expenses (average figure for a year) incurred inside the factory:

z z Works Manager’s salary and other emoluments ` 25,000.
z z Factory rent and rates ` 18,000. The total area of the factory is 45,000 sq.ft. of which
the shops occupy 40,000 sq.ft.

z z Wages of caretakers, sweepers, etc. ` 3,500.
z z Other factory overhead charges ` 26,500.
A work order is executed in a shop occupying 3,000 sq.ft. and costs ` 5,000 in wages.
If the total wages for all the work orders executed in this shop amount to ` 80,000.
Calculate the total amount of factory overhead charges to be debited to the account
of the work order in question.

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