Page 83 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Cost and Management Accounting

Notes Working notes:

1. Hourly rate of depreciation will be calculated as follows:
−
Cost of machine Scrap value
Hourly Rate of Dep. =
Hours of working life
` 9,200 −` 200
= = ` 0.50
18,000 Hours
2. Hourly Rate of Repair and Maintenance:

Cost of repairs and maintenance during the working life
=
Total life × Yearly normal working hours
` 1,125 ` 1,125
= = = ` 0.06
10 × 1,800 hours 18,000 hours

Task Marathi Motors manufactures jeeps and trucks. They have furnished the following
particulars for the quarter ended March 31, 2007.
`
Material 2,98,000

Direct wages 42,000
Stores expenses 20,000
Machinery maintenance 4,600
Depreciation 22,300
Staff welfare 12,000
General expenses 30,000
Administration and selling expenses 27,000
Additional information provided by them:
Jeep Truck
1. Production (Numbers) 300 400
2. Materials cost ratio per vehicle 1 2
3. Direct labour ratio 2 3
4. Machine hour ratio 1 2

Calculate the cost per crankshaft, of each vehicle, indicating the basis of apportionment
adopted by you.

Self Assessment

Fill in the blanks:
7. The ...................... serves as a measure of utilisation of the facilities.

8. The extent of idle capacity is indicated by ...................... .
9. The direct labour hour rate is obtained by dividing the total overhead of the department
for a particular period by the total number of ...................... of that department for the same
period.

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