A company has two production departments and two service departments. The data relating to a kperiod…
A company has two production departments and two service departments. The data relating to a kperiod are as follows.
Particulars
Prod. Dept. I
Prod. Dept. II
Service Dept I
Service Dept II
Direct Materials
80,000
40,000
10,000
20,000
Direct Wages
95,000
50,000
20,000
10,000
Overheads
80,000
50,000
30,000
20,000
Power requirement at normal capacity operation (Kwh)
20,000
35,000
12,500
17,500
Actual power consumption (Kwh)
13,000
23,000
10,250
10,000
The power requirement of these departments are met by a power generation plant. The said plant incurred an expenditure which is not included above, of Rs.1,21,875 out of which a sum of Rs. 84,375 was variable and the rest fixed.
After apportionment of power generation plant costs to the four departments, the service department overheads are to be redistributed on the following basis.
Departments
Prod. Dept I
Prod. Dept II
Service Dept I
Service Dept II
Service Dept I (%)
50
40
–
10
Service Dpet II
60
20
20
–
You are required to,
i. Apportion the power generation plant costs to the four departments
ii. Reapportion service department cost to production departments
iii. Calculate the overhead rate per direct labor hour of production departments, given that the direct wages rates of Production Dept I, II are Rs. 5 and Rs. 4 per hour respectively.
