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Accounts Overhead Timing – 1:30 Hours
Q1. You are given the following overheads relating to a factory :
Factory Rent Rs.48,000; Power Rs.23,000; Depreciation Rs.1,00,000; Store Room Expenses Rs.30,000; Indirect Material Rs.60,000; Canteen subsidy Rs.25,000; Indirect Labour Rs.90,000; Employer’s contribution towards ESI Rs.50,000; Light Rs.18,000. Factory supervision Rs.75,000.
Following are specific cost details relating to its five departments A, B, C, P and Q of which A, B and C are production departments and P and Q are service departments :
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| Production Departments |
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| Service Departments | ||||
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| A | B | C | P | Q | ||||
| Area (Sq. mts.) | 2,000 | 1,000 | 500 | 800 | 500 | ||||
| Hours worked | 1,000 | 1,000 | 1,000 | 500 | 500 | ||||
| Horse Power of Machine | 80 | 80 | 30 | 40 | 40 | ||||
| Traceable overheads (Rs.) | 50,000 | 80,000 | 30,000 | 20,000 | 25,000 | ||||
| Value of Plant (Rs.) | 4,00,000 | 3,00,000 | 1,00,000 | 1,50,000 | 50,000 | ||||
| Direct Material (Rs.) | 1,00,000 | 1,50,000 | 1,50,000 | 1,60,000 | 40,000 | ||||
| Direct Labour (Rs.) | 2,00,000 | 1,00,000 | 1,00,000 | 30,000 | 20,000 | ||||
| No. of workers | 800 | 700 | 500 | 200 | 300 | ||||
| No. of Material |
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| Requisitions | 500 | 300 | 1,000 | 800 | 400 | ||||
| Light Points | 100 | 30 | 25 | 15 | 10 | ||||
Depreciation is charged on straight line basis. Overheads of service department P are to be shared by A, B, C and Q in the ratio of 5:3:7:5 and that of department Q are to be shared by A, B, C and P in the ratio of 1:2:3:4.
Q2. A company has three production department A, b and C and two service departments X and Y. The following information is available regarding various expenses :
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| Power | Rs.2,400 | Maintenance of buildings | Rs.2,400 |
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| Rent | 4,200 | Fire precaution service | 1,200 |
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| Canteen | 3,000 | Insurance on assets | 1,000 |
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| Personnel Deptt. | 3,000 | Depreciation (10% of capital value) |
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| Time Office | 1,000 |
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| Production Departments |
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| Service Department | |||||
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| A | B | C | X | Y | |||||
| Area (sq. metres) | Rs.4,000 | Rs.4,000 | Rs.3,000 | Rs.2,000 | Rs.1,000 | |||||
| K.W. hours | 2,000 | 2,200 | 800 | 750 | 250 | |||||
| No. of workers | 900 | 1,200 | 300 | 400 | 200 | |||||
| Capital value of assets (‘000) Rs. | 50 | 60 | 40 | 30 | 20 | |||||
The services of X and Y departments are used by the other departments in the following proportion :
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| A | B | C | X | Y |
| X | 25% | 30% | 25% | -- | 20% |
| Y | 40% | 20% | 30% | 10% | -- |
Calculate total overheads of production departments after reapportioning service department overheads using simultaneous equation method.
Q3.The following expenses have been incurred in respect of a shop having 4 identical machines:
Rent and rates Rs.6,000 p.a.
Power consumed by the shop @ 10 paise per unit Rs.4,800 p.a.
Repairs Rs,1,000 p.a.
Lighting for the shop Rs.800 p.m.
Attendants two each getting Rs.60 p.m.
Supervision salary Rs.600 p.m.
Lubricants etc. Rs.100 p.a.
Depreciation per machine (Variable Cost) Rs.600 p.a.
Hire Purchase instalments for the machines includes Rs.300 for interest/
Each machine consumes 10 units of power in
