Accounting 9706 · AS & A Level · Traditional costing methods

Traditional costing methods — practice question

A company operates two production departments, manufacturing and assembly, together with a stores service department. Overheads are to be apportioned to each department by using the costing data provided: direct labour hours-manufacturing $8400$, assembly $33600$; machine hours-manufacturing $20160$, assembly $6720$; total cost of the stores department $032800$; number of store requisitions-manufacturing $3000$, assembly $2000$. Calculate the overhead absorption rates for the two production departments for the stores.

  • Amanufacturing department $\$0.39$ per direct labour hour; assembly department $\$0.98$ per machine hour
  • Bmanufacturing department $\$0.58$ per direct labour hour; assembly department $\$0.65$ per machine hour
  • Cmanufacturing department $\$0.65$ per machine hour; assembly department $\$0.58$ per direct labour hour
  • Dmanufacturing department $\$0.98$ per machine hour; assembly department $\$0.39$ per direct labour hour

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