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Overhead Allocation Guide

The document provides information about overhead allocation and apportionment for two companies, Swatathon Inc and Sand Storm. For Swatathon Inc, details are given about total overhead costs and departmental details including floor area, machine book value, number of employees, and allocated overheads. For Sand Storm, details are given about overhead costs including rents & rates, power, heat & light, depreciation, and insurance, as well as departmental details including floor area, plant value, fixtures & fittings, and effective horse power. Both companies' questions require allocating overheads to departments using appropriate bases, and for Sand Storm reapportioning maintenance and general costs based on provided percentages.

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HassanAbsarQaimkhani
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© Attribution Non-Commercial (BY-NC)
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249 views3 pages

Overhead Allocation Guide

The document provides information about overhead allocation and apportionment for two companies, Swatathon Inc and Sand Storm. For Swatathon Inc, details are given about total overhead costs and departmental details including floor area, machine book value, number of employees, and allocated overheads. For Sand Storm, details are given about overhead costs including rents & rates, power, heat & light, depreciation, and insurance, as well as departmental details including floor area, plant value, fixtures & fittings, and effective horse power. Both companies' questions require allocating overheads to departments using appropriate bases, and for Sand Storm reapportioning maintenance and general costs based on provided percentages.

Uploaded by

HassanAbsarQaimkhani
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

A S S I G N M E N T   M A T E R I A L 

OVERHEAD
ALLOCATION &
APPORTIONMENT  

M A N A G E M E N T   A C C O U N T I N G 
A S S I G N M E N T   M A T E R I A L 

QUESTION # 1 

  Swatathon Inc has two production departments (A and B) and two service departments 
(maintenance and stores). Details of next year’s budgeted overheads are shown below. 

Total Rs. 
Heat & Light  19,200  
Repair costs  9,600  
Machinery Depreciation  54,000  
Rent & rates  38,400  
Canteen  9,000  
Machinery Insurance  25,000  
Details of each department are as follows, 
A  B  Maintenance  Stores  Total 
Floor area  6,000  4,000  3,000  2,000  15,000  
Machine Book Value  48  20  8  4  80  
Number of employees  50  40  20  10  120  
Allocated Overheads  15  20  12  5  50  

REQUIRED: 

a. Allocate the overheads by choosing appropriate basis. 

QUESTION # 2 

  Sand Storm  is a jobbing engineering concern which has there production departments (forming, 
machine and assembly) and two service departments (maintenance and general). 

The following analysis of overhead costs has been made for the year just ended. 

Rs.  Rs. 
Rents & Rates  8,000 
Power  750 
Heat & Light  5,000 
Depriciation 
         Plant  10,000 
         Fixtures & Fittings  250 
10,250 
Insurance 
        Plant  2,000 
        Building  500 
2,500 
26,500 
Other available data are as 
follows,     
Fixtures  Effective 
Floor  Plant 
&  Horse 
  Area  Value 
Fittings  Power 
Forming  2,000   25,000   1,000  40 
Machines  4,000   60,000   500  90 
M A N A G E M E N T   A C C O U N T I N G 
A S S I G N M E N T   M A T E R I A L 

Assembly  3,000   7,500   2,000  15 


Maintenance  500   7,500   1,000  5 
 
General  500   ‐  500  ‐ 

REQUIRED: 
 
a. Allocate the overheads by choosing appropriate basis. 
 
b. Reapportion Maintenance and General cost on the basis of following %. 

Maintenance General 
Forming  20% 34%
Machines  50% 58%
Assembly  30% 8%

   

M A N A G E M E N T   A C C O U N T I N G 

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