QUESTION ONE

The initial budgeted allocation of overhead cost to the six departments in a factory is as follows:

Production departments:-
Making 750,000
Converting 500,000
Finishing 250,000
Service Departments:-
Maintenance 120,000
Power Raising 270,000

The use of the service departments by the production departments and by each other is estimated as follows:-

Making Converting Finishing Maintenance Power Raising
Maintenance 30 20 25 - 15
Power Raising 50 30 10 5 -

Required:
Calculate the final overhead cost allocated and apportioned to each production department, where, the re-apportionment of service department cost is:-

  1. According to the estimated usage, but ignoring all reciprocal service department charges.
  2. Using the elimination method where the costs of each service department are re-apportioned to all departments which use the service, but where each service department is "closed off" after costs have been apportioned, and no further apportionment is made to it.
  3. According to the estimated usage, taking into account all reciprocal service department charges using the repeated distribution method.


  • Updated: 02 Jul 24
  • |
  • Attempts: 3425
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  • Correct: 919

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(i) Total overhead of Making department:
QUESTION TWO

ABC limited has two service departments, Personnel and Custodial and two production departments A and B.
Budgeted data for the current year appear below:

service department production department
Personel Custodial A B
Direct labour(Tshs) ---- ---- 2,000,000 5,000,000
Direct materials(Tshs) ---- ---- 4,000,000 8,000,000
Overheads(Tshs) 3,000,000 2,100,000 5,500,000 10,000,000
Employees 4 24 20 30

Space occupied in

service department production department
Personel Custodial A B
Thousand of sq.ft 20 10 40 80

Required:
Apportion service cost centers costs to production cost centers using DIRECT METHOD.
Note: Personnel costs are apportioned on the basis of employees and Custodial costs apportioned on the basis of space occupied.


  • Updated: 02 Jul 24
  • |
  • Attempts: 1134
  • |
  • Correct: 460

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Total cost of department A:
QUESTION THREE

Bondeni Manufactures Ltd is preparing its production overheads budgets. Information relating to its production and service cost centers is as follows:

Production department Budget overhead
Tsh
Direct labour
(hours)
Machine Usage
(hours)
Area
m2
Machine shop A 22,408,000 4,000 3,600 5,000
Machine shop B 22,615,000 3,100 9,000 6,000
Assembly 13,416,000 10,400 7,500
service department
Canteen 16,625,000 - - 3,000
Maintenance 8,316,000 - - 1,000

Required:
Apportion the service cost centers cost using the direct method of apportionment


  • Updated: 02 Jul 24
  • |
  • Attempts: 858
  • |
  • Correct: 285

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Total Overhead for Machine shop A:
QUESTION FOUR

Jitegemee Enterprises has three service departments and two operating departments.
Cost and other data relating to these departments are shown below:

Service department Operating departments
Janitorial Cafeteria Engineering Assembly Finishing
Overheads (Tshs) 600,000 426,000 750,000 2,300,000 3,000,000
Square feet 1,500 2,000 1,000 4,000 3,000
No. of employee 15 12 50 200 400

The enterprise allocates Janitorial costs on the basis of square feet, Cafeteria and Engineering costs are allocated on the basis of number of employees.
The enterprise also allocates service department costs in the following order, Janitorial, Cafeteria and Engineering.
Required:
Allocate service department costs to Operating departments using the STEP METHOD.


  • Updated: 02 Jul 24
  • |
  • Attempts: 599
  • |
  • Correct: 270

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Total Overhead for Finishing department:
QUESTION FIVE

Suppose a company has two productions and two service departments (Stores and Maintenance).
The information about activity in a recent costing period is available below:

Production department Service departments
X Y Stores Maintainance
Overheads (Tshs) 10,030,000 8,970,000 10,000,000 7,000,000
Value of materials Requisation (Tshs) 30,000,000 50,000,000 ---- 20,000,000
Maintainance hours used 8,000 1,000 1,000 ----

Required:
Apportion the overhead costs of service departments using the Step Method of apportionment, starting with the Stores department.


  • Updated: 02 Jul 24
  • |
  • Attempts: 479
  • |
  • Correct: 279

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Total Overhead for department X:
QUESTION SIX

Mzalendo Manufacturing Co. Ltd has for production cost centres and two service cost centres. For the period ended 30th June, 2019 the overhead allocated and apportioned to the cost centres were as follows:

Production cost centers: TZS
A 4,800,000
B 5,600,000
C 6,800,000
D 2,400,000
Service cost centers: TZS
X 1,800,000
Y 2,400,000

The service cost centres are used by the production cost centres and by each other in the following proportions:-

Unit cost centres: A B C D X Y
Apportionment of:
X (%) 30 20 25 15 - 10
Y (%) 20 30 10 25 15 -

Required:
Prepare a statement showing the final distribution of the overhead costs to the production cost centres:-

  1. Where the charging of one service cost center to another service cost centre is ignored.
  2. Where the elimination method is used commencing with service cost centre X.
  3. Where repeated distribution method is used. "Note: Any figure below T.shs 5,000/- is immaterial."


  • Updated: 02 Jul 24
  • |
  • Attempts: 2766
  • |
  • Correct: 883

Confirm answers here

(a) Total overhead of cost centre A:
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