foh distribution

91
Overhead distribution

Transcript of foh distribution

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Overhead distribution

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Departmentalization

1 Process of dividing the factory into number of Segments Is called Departmentalization

P1 S1P2 P3 S1

Prod Departments Service Dept.

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Departmentalization

2 Process of allocating and apportioning POHEs to different departments or

cost centers (Prod & Service )

P1 S1P2 P3 S1

Prod Departments Service Dept.

FactoryOverheads

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Departmentalization

P1 S1P2 P3 S1

Prod Departments Service Dept.

FactoryOverheads

Allocation &Apportionment

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Service Departments

Time-Keeping

RepairDepartment

MaintenanceDepartment

Canteen Purchase

Tool Room

BoilerHouse

PersonnelDepartment

Power House

Fire Protection

Stores

Transport

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Distribution of Overhead

ALLOCATION APPORTIONMENT

SpecificCosts

CommonCosts

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Distribution of Overhead

ALLOCATION

SpecificCosts

Allocating whole amount Of an item

of POHs to thedepartment for whichThe expenditure was

incurred

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Distribution of Overhead

APPORTIONMENT

CommonCosts

Common costs are apportionedAmongst different departmentsor cost centers on some basis

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Principal Basis of Apportionment Of Overheads

Floor Area

Capital Value Of Assets

Number Of Employees

Machine Hours

Direct Labour Hours

Light Points

Kilowatt Hours

Technical Analysis

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BASIS FOR APPORTIONMENT

Light PointsOr

Kilowatt Hours

Direct Labour

Hrs

Work’s Manager’s Remuneration, Salary ofSupervisors etc

Electricity Charges

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BASIS FOR APPORTIONMENT

Technical Estimate

Where not possible to apportion on some Bases Technical estimate is made

HorsePower Motive Power Expenses

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BASIS FOR APPORTIONMENT

Store Keeping Expenses

Value orWeight ofMaterials

Transport Service ExpensesTruck MileageTonnageTruck HoursNo.Of Pakages

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PRINCIPLES OF APPORTIONMENTPRINCIPLES OF APPORTIONMENT

Utility Utility ororServiceService

PrinciplePrinciple

Ability To PayAbility To Pay

Survey MethodSurvey Method

EfficiencyEfficiencyPrinciplePrinciple

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PRINCIPLES OF APPORTIONMENTPRINCIPLES OF APPORTIONMENT

Utility Utility ororServiceService

PrinciplePrinciple

Service or Benefits received By the department

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PRINCIPLES OF APPORTIONMENTPRINCIPLES OF APPORTIONMENT

Ability To PayAbility To Pay

What the Traffic can bearWhat the Traffic can bear

Basis of Sales or ProfitBasis of Sales or Profit

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PRINCIPLES OF APPORTIONMENTPRINCIPLES OF APPORTIONMENT

Survey MethodSurvey Method

When Difficult to select BasisWhen Difficult to select Basis

Production Manager’s SalaryProduction Manager’s Salary(Time spent in Each Dept)(Time spent in Each Dept)

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PRINCIPLES OF APPORTIONMENTPRINCIPLES OF APPORTIONMENT

EfficiencyEfficiencyPrinciplePrinciple

Out put as the basisOut put as the basis

Higher ProductionHigher ProductionLow Overhead RateLow Overhead Rate

Low ProductionLow ProductionHigh OH RateHigh OH Rate

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Quick Check

Identify the Basis for following Overheads

RentPlant RepairsPowerDepreciation of BuildingBuilding RepairsInsurance Of BuildingFire Insurance of StockLighting ExpensesSupervisionPower ESIEmployer’s Cont. to PFAmenities To StaffCanteenGn. Overheads

Floor AreaValue of PlantMachine Hours/HP/VMValue Of BuildingValue Of BuildingFloor AreaValue Of StockNo.Of Light PointsNo.Of EmployeesKilowatt/Value of PlantDirect WagesDirect WagesNo.Of Employees/WagesNo.Of EmployeesDirect Wages

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Summary Of Departmental Overhead Distribution

Particulars Basis Total (Rs)

Production Departments

A B C D(Rs) (Rs) (Rs) (Rs)

Rent Area(15:11:9:5) 2,000 750 550 450 250Plant Maintenance Value Of Mch. (4:3:2:1) 1,200 480 360 240 120Depreciation Value Of Mch. (4:3:2:1) 900 360 270 180 90Lighting Area(15:11:9:5) 200 75 55 45 25Insurance Stock Value(5:3:2) 1,000 500 300 200 --Employer's Cont to PF Wages (4:3:2:1) 300 120 90 60 30

Energy Value Of Mch. (4:3:2:1) 1,800 720 540 360 180Supervision No.Of Emp (6:4:3:2) 3,000 1,200 800 600 400

Total 10,400 4,205 2,965 2,135 1,095

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Summary Of Departmental Overhead Distribution

Particulars Basis Total (Rs)

Production Dept.

A B C D(Rs) (Rs) (Rs) (Rs)

SD

Rent Area 10,000 3,750 2,750 2,250 1,250Repairs To Plant Value Of Plant 6,000 2,400 1,800 1,200 600Depreciation “ 4,500 1,800 1,350 900 450Lighting Light Points 1,000 375 275 225 125Supervision No Of Employees 15,000 6,000 4,500 3,000 1,500Fire Insurance Value Of Stock 5,000 2,500 1,500 1,000 -Power Value Of Plant 9,000 3,600 2,700 1,800 900ESI Wages 1,500 600 400 300 200

Total 52,000 21,500 15,27510,675 5,025

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Redistribution of Overheads Reapportionment of OverheadsSecondary Distribution Of Overheads

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JOIN KHALID AZIZ

ACCOUNTING(FINANACIAL & COST) OFICMAP STAGE 1,2,3,4 (NEW CLASSES)CA..MODULE B,C,DPIPFA (FOUNDATION,INTERMEDIATE,FINAL)ACCA-F1,F2,F3BBA,MBAB.COM(FRESH),M.COMMA-ECONOMICS..O/A LEVELSKHALID AZIZ….. 0322-3385752 0312-2302870 0300-2540827

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ProductionDepartments

ServiceDepartments

Carry out the central purposes

of an organization.

Provide supportthat facilitates the

activities of production departments.

Service Department Cost Re-Apportionment

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First, we identify the factor that drives costs in the

service department.

This cost driver is usedas the apportionment base.

The Need for Cost Re-Apportionment

How are servicedepartment costs

charged to operatingdepartments?

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The Need for Cost Apportionment

Second, we measure theconsumption of the

apportionment base in theoperating departments.

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The Need for Cost Apportionment

Third, we apportionthe service

department costbased on the

relative amount of the apportionment base

used in eachoperating department.

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What happens toservice department

costs after theyare apportioned to

operatingdepartments?

The Need for Cost Apportionment

Apportioned service departmentcosts become a part ofthe overhead in each

operating department.

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The Need for Cost ApportionmentFirst Stage Apportionment

Service department costs are apportioned to operating

departments.Service

Department(Cafeteria)

Service Department(Accounting)

Service Department(Personnel)

Operating Department(Machining)

Operating Department(Assembly)

The Products

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The Need for Cost Apportionment

Service Department(Cafeteria)

Service Department(Accounting)

Service Department(Personnel)

Operating Department(Machining)

Operating Department(Assembly)

The Products

Second Stage Apportionment

Operating department overhead costs and apportioned service department costs are

applied to products.

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Selecting Apportionment BasesPersonnel:Number ofemployees

Receiving:Units

handled

Security:Squarefootage

Power:Kilowatt

hours

Cafeteria:Number ofemployees

Custodial:Squarefootage

Accounting:Staffhours

Criteria

Easiest

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Re- apportionment Basis

PurchaseDepartment

Stores

No of Purchase Orders or value of MaterialsPurchased for each Production Department

•Value or Quantity of Materials Issued•No. Of Materials Requisitions

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Re- apportionment Basis

Internal Transport

inspection Inspection Hrs. Devoted to eachDepartment

Weight & Distance

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Re- apportionment Basis

Time Keeping,SecurityCanteenWelfareRecreationMedicalPersonnelPay Roll

•Number Of Employees•Total Labour Hours or•Wages or Salaries

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Re- apportionment Basis

MaintenanceDepartment

FactoryOffice No .Of Employees

Hrs. Devoted or Worked forEach Department

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Re- apportionment Basis

Building Service Deptt

Boiler House % Of Steam Utilized

Relative Area Of Each Deptt

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Interdepartmental Services

Problem

Re Apportioning costs when service departmentsprovide services to each other

Problem

Re Apportioning costs when service departmentsprovide services to each other

Solutions

Direct Method

Step method

Reciprocal method

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Direct Method

Service Department(Cafeteria)

Service Department(Custodial)

Operating Department(Machining)

Operating Department(Assembly)

Interactionsbetween servicedepartments areignored and all

costs areallocated directly

to operatingdepartments.

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Direct Method Example

Service Department Apportionment Base

Cafeteria Number of employeesCustodial Square feet occupied

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Direct Method Example

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Direct Method Example

Apportionment base: Number of employees

INR 360,000 ×20

20 + 30 = INR 144,000

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Direct Method Example

Apportionment base: Number of employees

INR 360,000 ×30

20 + 30= INR 216,000

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Direct Method Example

INR 90,000 ×25,000

25,000 + 50,000 = INR 30,000

Apportionment base: Square feet occupied

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Direct Method Example

Apportionment base: Square feet occupied

50,000

25,000 + 50,000INR 90,000 × = INR 60,000

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Items Basis Total(Rs.)

Production Department Service Department

P1 P2 P3 Office Workshop

Indirect wagesIndirect materialsGeneral overhead

Amenities to staff

Employer’s contribution to E.S.I. Power

Depreciation

Apportionment of workshop overheadApportionment of office overhead

ActualActual

Direct wages(4:5:6)

No.of employees(6:5:6:3:5)

Direct Wages(4:5:6)

H.P. of machineX

Machine hours worked

(6:16:15:1)15% of value of

machinery

Machine hours(2:4:3)

Direct wages(4:5:6)

25,00010,9501,500

12,500

1,200

3,800

15,750

3,0002,000

400

3,000

320

600

4,500

3,0003,000

500

2,500

400

1,600

5,250

4,0003,000

600

3,000

480

1,500

3,750

10,0001,100

-

1,500

- -

-

5,0001,850

-

2,500 -

100

2,250

70,700 13,820

2,600

3,360

16,250

5,200

4,200

16,330

3,900

5,040

12,600

-

(-12,600

11,700

(-) 11,700

-

Allocated overhead Total 19,780 25,650 25,270 - -

Overhead Analysis Sheet

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Bharat Engineering Works Departmental Overhead Distribution Statement (For 12 Months)

Particulars of Expenses

Basis of Distribution

Total Rs.

Production Deptts. Service Dept.

A B C S

Rent

Power

Indirect wages

Depreciation of machinery Electricity

Canteen expensesDirect wages

Floor space(30:25:45:20)H.P. of machine(65:30:30:40)Direct Wages(12:14:18:8)Value of machine(50:60:80:10)Light points(7:7:9:5)No. of workers(2:3:6:2)Actual

36,000

8,250

5,200

22,000

5,600

6,500

8,000

9,000

3,250

1,200

5,500

1,400

1,000

---

7,500

1,500

1,400

6,600

1,400

1,500

---

13,500

1,500

1,800

8,800

1,800

3,000

---

6,000

2,000

800

1,100

1,000

1,000

8,000

91,550 21,350

+5,970

19,900

+3,980

30,400

+9,950

19,900

-19,900

Re-distribution of expenses of service department to the production departments on the basis of service rendered 30%: 20%:50%

Allocated overhead total (A)

Effective labour hours (see workings) (No. of worker x working hours) (B)

27,320 23,880 40,350 Nil

3,200 4,800 9,600

Labour hour rate (A ÷ B) 8.5375 4.975 4.203

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Operating Department(Machining)

Operating Department(Assembly)

Step Method

Once a servicedepartment’s costsare apportioned,

other servicedepartment costsare not allocated

back to it.

Service Department(Cafeteria)

Service Department(Custodial)

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Step Method

Service Department(Cafeteria)

Service Department(Custodial)

Operating Department(Machining)

Operating Department(Assembly)

Custodial willhave a new

total to Apportionto operating

departments; itsown costs plus

those costsallocated fromthe cafeteria.

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Step Method

1 Identify the SD which renders service to larger No’s of other Deptts

2 Distribute its Costs to other Deptts , Including service Department

3 Identify the next service Department. Which renders service to the next largest No’s

4 Continue the process till Amount is Exhausted

5 If all SD renders service to = No of Departments. Than cost of SD with largest amount be taken first

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JOIN KHALID AZIZ

ACCOUNTING(FINANACIAL & COST) OFICMAP STAGE 1,2,3,4 (NEW CLASSES)CA..MODULE B,C,DPIPFA (FOUNDATION,INTERMEDIATE,FINAL)ACCA-F1,F2,F3BBA,MBAB.COM(FRESH),M.COMMA-ECONOMICS..O/A LEVELSKHALID AZIZ….. 0322-3385752 0312-2302870 0300-2540827

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Step Method Example

Service Department Apportionment Base

Cafeteria Number of employeesCustodial Square feet occupied

We will use the same data used in the direct method example.

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Step Method Example

Apportion Cafeteria costs first sinceit provides more service than Custodial.

Apportion Cafeteria costs first sinceit provides more service than Custodial.

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Step Method Example

INR 360,000 ×10

10 + 20 + 30= INR 60,000

Apportionment base: Number of employees

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Step Method Example

INR 360,000 ×20

10 + 20 + 30= INR 120,000

Apportionment base: Number of employees

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Step Method Example

INR 360,000 ×30

10 + 20 + 30= INR 180,000

Apportionment base: Number of employees

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Step Method Example

New total = INR 90,000 original custodial cost plus INR 60,000 apportioned from the cafeteria.

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Step Method Example

INR 150,000 ×25,000

25,000 + 50,000 = INR 50,000

Apportionment base: Square feet occupied

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Step Method Example

INR 150,000 ×50,000

25,000 + 50,000 = INR 100,000

Apportionment base: Square feet occupied

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Comparison of Methods

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SECONDARY OVERHEAD DISTRIBUTION SUMMARY

Particulars Total Rs. Base Service Departments (Rs.) Production Departments

P Q R S X Y ZFactory overhead

Add :

Service

Dept.costs

P

Q

R

S

5,95,000

0

0

0

0

Given

No. of

Employees

(50:40:50:

100:125:85)

DLHs

Rs.80,000 in

(6:3:4:3:4)

Area

(Rs.1,33,000 in (10:30:15:

15)

DLHs (Rs.66,000 in 4:3:4)

45,000

-45,000

75,000

5,000

-80,000

1,05,000

4,000

24,000

-1,33,000

30,000

5,000

12,000

19,000

-66,000

1,93,000

10,000

16,000

57,000

24,000

64,000

12,500

12,000

28,500

18,000

83,000

8,500

16,000

28,500

24,000

Total OHEs of prod.depts

5,95,000 3,00,000 1,35,000 1,60,000

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Reciprocal Services Method

Interdepartmentalservices are given

full recognitionrather than partialrecognition as withthe step method.

Service Department(Cafeteria)

Service Department(Custodial)

Operating Department(Machining)

Operating Department(Assembly)

Because of its mathematical complexity,

the reciprocal method is rarely used.

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Reciprocal Services Methods

Trial & Error Method

RepeatedDistribution

Method

Algebraic Simultaneous

Equation Method

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Reciprocal Services Methods

Trial & Error Method

Cost Of one Service Dept (Say A ) is apportioned To another Service Dept (Say B) based on service rendered

The cost of another dept (B) plus its share In the cost of first service department (A) Is again apportioned to first service department

The amount so apportioned to A will again be apportioned to the service department B

The process continues till amount becomes negligible

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Service Departments (Rs)

X Y

Calculation Of Total Costs Of Service Departments

Total Exp as per Primary Distribution 23,400 30,000

Charge

10% 0f Rs 23,400 (X) to Y 2,340 20% of Rs.32,340 (Y) to X 6,468 10% of Rs.6,468 (X) to Y 64720% of Rs.647 (Y) to X 129 10% of Rs.129 (X) to Y 1320% of Rs.12 (Y) to X 3(Since Rs.3 to be apportioned is very small

distribution process is stopped )

30,000 33,000Total

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Secondary Overhead Distribution Summary

Particulars

Production Departments (Rs.)

Total Rs.

A B C

Total expenses as per primary overhead distribution summary

Add Service Dept. Costs :

X : Rs.30,000 at 20%, 40%

& 30% to A,B, and C

Y : Rs.33,000 at 40%, 20%

& 20% to A, B & C

80,000

6,000

13,200

70,000

12,000

6,600

50,000

9,000

6,600

2,00,000

27,000

26,400

Total 99,200 88,600 65,600 2,53,400

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Reciprocal Services MethodsRepeated

DistributionMethod

1 Distribute the cost of a service Dept . to the Production and service department Using the percentage

2 Apportion the cost of 2nd service department (Aggregate) to production and other service department as per % given

3 Use the same procedure with other service departments till the cost of service departments become negligible

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Question A factory is having 3 prod . Departments A,B & C, and 2 service Departments Boiler House and Pump Room. The boiler house was to depend upon the pump Room for supply of water and in turn ,depends upon the boiler house for supply of steam power for driving the pump The expenses incurred by the production department during the period are: A Rs 8,00,000,B Rs 7,00,000And C Rs 5,00,000.The expenses of Boiler house are Rs 2,34,000 and the Pump House Rs 3,00,000.The expenses of Boiler House and Pump house are Apportioned to the prod. departments on the following basis

A B C BH PRExpenses Of Boiler House 20% 40% 30% - 10%

Expenses Of Pump Room 40% 20% 20% 20% -

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Particulars Total Rs

BasisProd Departments (Rs) Service Dept

(Rs)A B C Boiler Pump

P Distribution 25,34,000 given 8,00,000 7,00,000 5,00,000 2,34,000 3,00,000Add Service Dept. Costs

Boiler House 0 20:40:30:10 46,000 93,600 70,200 -2,34,000 23,400

Pump Room 0 40:20:20:20 1,29,360 64,680 6 4,680 64,680 -3,23,400

Boiler House 0 20:40:30:10 12,936 5,872 19,404 -64,680 6,468

Pump Room 0 40:20:20:20 2,587 1,294 1,294 1,293 -6,468

Boiler House 0 20::40:30:20 259 517 388 -1293 129

Pump House 0 40:20:30:20 52 26 26 25 -129

Boiler House 0 20:40:20:20 5 10 8 -25 2

Pump House 0 40:20:20:20 1 1 0 0 -2

Total 25,34,000 9,92,000 8,86,000 6,56,000 0 0

Secondary Overhead Distribution Summary

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Reciprocal Services Methods

AlgebraicSimultaneous

Equation Method •Total Costs of Service Departments are

Expressed in algebraic equation

•Equations are developed on the basis of Primary distribution & % of service rendered to each other

•Total Costs of Service Departments can Be calculated by solving EQUATIONS

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Algebraic Equation

X= OHE’s + % of Y

Y= OHE’s + % of X

Service Department OHE’S can be apportioned

M N P R SR 20% 30% 40% - 10%

S 30% 40% 10% 20% -

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Quick Check Data

Allocation bases:Business school administration costs (ADMIN): Number of employees

Business administration computer services (BACS): Number of personal computers

The direct method of Apportionment is used.

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Quick Check

How much cost will be apportioned from Administration to Accounting?

a. INR 36,000

b. INR144,000

c. INR180,000

d. INR 27,000

How much cost will be apportioned from Administration to Accounting?

a. INR 36,000

b. INR144,000

c. INR180,000

d. INR 27,000

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How much cost will be apportioned from Administration to Accounting?

a. INR 36,000

b. INR144,000

c. INR180,000

d. INR 27,000

How much cost will be apportioned from Administration to Accounting?

a. INR 36,000

b. INR144,000

c. INR180,000

d. INR 27,000

Quick Check

INR180,000X20

20 + 80= INR 36,000

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Quick Check

How much total cost will be apportioned from ADMIN and BACS combined to the Accounting Department?

a. INR 52,500

b. INR135,000

c. INR 270,000

d. INR 49,500

How much total cost will be apportioned from ADMIN and BACS combined to the Accounting Department?

a. INR 52,500

b. INR135,000

c. INR 270,000

d. INR 49,500

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Quick Check

How much total cost will be apportioned from ADMIN and BACS combined to the Accounting Department?

a. INR 52,500

b. INR 135,000

c. INR 270,000

d. INR 49,500

How much total cost will be apportioned from ADMIN and BACS combined to the Accounting Department?

a. INR 52,500

b. INR 135,000

c. INR 270,000

d. INR 49,500

INR 90,000 ×18

18 + 102 = INR 13,500

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Quick Check Data

Apportionment bases:Business school administration costs (ADMIN): Number of employees

Business administration computer services (BACS): Number of personal computers

The step method of apportionment is used.

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Quick Check

How much total cost will be apportioned from ADMIN and BACS combined to the Accounting Department?

a. INR 35,250

b. INR 49,072

c. INR 18,000

d. INR 26,333

How much total cost will be apportioned from ADMIN and BACS combined to the Accounting Department?

a. INR 35,250

b. INR 49,072

c. INR 18,000

d. INR 26,333

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Quick Check

How much total cost will be apportioned from ADMIN and BACS combined to the Accounting Department?

a. INR 35,250

b. INR 49,072

c. INR 18,000

d. INR 26,333

How much total cost will be apportioned from ADMIN and BACS combined to the Accounting Department?

a. INR 35,250

b. INR 49,072

c. INR 18,000

d. INR 26,333

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Overhead Appropriation

Few Questions

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4. SECONDARY DISTRIBUTION SUMMARY

Cost of service department

Basis of apportionment

Total Rs.

Production Department

P1 P2 P3

primary distributionCanteen

Power house (light)

Power house (power)

Stores

Time keeping & accounts

Repair shop

---No. of employee

(6:5:4)No. of light points

(3:4:5)House Power

(3:2:3)No. of requisitions

(4:3:5)No. of employee

(6:5:4)

Value of assets(2:3:4)

63,0001,500

1,200

4,000

3,600

3,000

4,500

20,000600

300

1,500

1,200

1,200

1,000

18,000500

400

1,000

900

1,000

1,500

25,000400

500

1,500

1,500

800

2,000

Allocated overhead Total 80,800 25,800 23,300 31,700

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Items Basis Total(Rs.)

Production Department Service Department

P1 P2 P3 Office Workshop

Indirect wagesIndirect materialsGeneral overhead

Amenities to staff

Employer’s contribution to E.S.I. Power

Depreciation

Apportionment of workshop overheadApportionment of office overhead

ActualActual

Direct wages(4:5:6)

No.of employees(6:5:6:3:5)

Direct Wages(4:5:6)

H.P. of machineX

Machine hours worked

(6:16:15:1)15% of value of

machinery

Machine hours(2:4:3)

Direct wages(4:5:6)

25,00010,9501,500

12,500

1,200

3,800

15,750

3,0002,000

400

3,000

320

600

4,500

3,0003,000

500

2,500

400

1,600

5,250

4,0003,000

600

3,000

480

1,500

3,750

10,0001,100

-

1,500

- -

-

5,0001,850

-

2,500 -

100

2,250

70,700 13,820

2,600

3,360

16,250

5,200

4,200

16,330

3,900

5,040

12,600

-

(-) 12,600

11,700

(-) 11,700

-

Allocated overhead Total 19,780 25,650 25,270 - -

1. Overhead Analysis Sheet

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2. OVERHEAD ANALYSIS SHEET

Items Basis Total (Rs.)

Production Deptt .(Rs) Service Deptt( Rs).

P1 P2 P3 S1 S2

Rent and rates

General lighting

Indirect wages

Power

Depreciation

Direct wages Indirect materials

Apportionment of Service DepartmentsOverheadS1

S2

Floor space(4:5:6:4:1)

Light points(2:3:4:2:1)

Direct wages(600:400:600:300:39)

H.P. of Machine(6:5:5:1)

Value of machines(12:16:20:1:1)

ActualActual

Direct wages(3:2:3)Given(2:3:5)

Total (A)Working hours (B)

5,000

600

1,939

1,500

10,000

1,695966

1,000

100

600

600

2,400

-300

1,250

150

400

300

3,200

-200

1,500

200

600

500

4,000

-200

1,000

100

300

100

200

1,500-

250

50

39

-

200

195266

21,700 5,000

1,200

200

5,500

800

300

7,000

1,200

500

3,200

(-) 3,200

-

1,000

-

(-) 1,000

21,700 6,4002,560

6,6003,000

8,7001,500

Nil Nil

Overhead rate per working hour [(A) ÷(B)] 2.50 2.20 5.80

Page 86: foh distribution

COST OF PRODUCT – X

Direct materialDirect Labour Prime CostFactory Overhead :P1 : 4 x 2.50

P2 : 5 x 2.20

P3 : 3 x 5.80

Cost of Product X

10.0011.0017.40

50.0030.00

80.00

38.40

118.40

( Rs)

Page 87: foh distribution

3. SECONDARY OVERHEAD DISTRIBUTION SUMMARY

Particulars Total Rs. Base Service Departments (Rs.) Production Departments

P Q R S X Y ZFactory overhead

Add :

Service

Dept.costs

P

Q

R

S

5,95,000

0

0

0

0

Given

No. of

Employees

(50:40:50:

100:125:85)

DLHs

Rs.80,000 in

(6:3:4:3:4)

Area

(Rs.1,33,000 in (10:30:15:

15)

DLHs (Rs.66,000 in 4:3:4)

45,000

-45,000

75,000

5,000

-80,000

1,05,000

4,000

24,000

-1,33,000

30,000

5,000

12,000

19,000

-66,000

1,93,000

10,000

16,000

57,000

24,000

64,000

12,500

12,000

28,500

18,000

83,000

8,500

16,000

28,500

24,000

Total OHEs of prod.depts

5,95,000 3,00,000 1,35,000 1,60,000

Page 88: foh distribution

5. OVERHEAD DISTRIBUTION STATEMENT

Particulars of Expenses

Basis of Apportionment

Total Rs. Production Deptts. Service Deptts.

X Y A B

Depreciation

Rent, Rates & Taxes

Power

Ins.on assets

Canteen exp.

Electricity

Direct wages Direct material

Assets value(10:5:3:1)Floor space(5:4:1:2)H.P. of machine(10:5:4:1)Assets value(10:5:3:1)No. of workers(100:50:50:25)Light points(25:15;10:10)ActualActual

38,000

18,000

12,500

9,500

5,400

3,600

8,0004,000

20,000

7,500

6,250

5,000

2,400

1,500

------

10,000

6,000

3,125

2,500

1,200

900

------

6,000

1,500

2,500

1,500

1,200

600

5,0004,000

2,000

3,000

625

500

600

600

3000---

99,000 42,650+11,150

23,725+7,433

22,300-22,300

10,325+3,717

Re-distribution of expenses of Deptt. A among X, Y and B in ratio 3:2:1 Re-distribution of expenses of Dept. B between X and Y equally

53,800

+7,021

31,158

+7,021

Nil

---

14,042

-14,042

Allocated overhead 60,821 38,179 Nil Nil

Page 89: foh distribution

7. STATEMENT SHOWING OVERHEAD EXPENSES OF PRODUCTION DEPARTMENTS A AND B

Particulars of Expenses

Basis of Apportionment

Total Rs. Production Deptts. Service Deptts.

A B C D

Direct materialDirect labour Depreciation

Rent,Rates & Tax

Insurance

Power Canteen exp. Electricity

ActualActualValue of Assets(10:5:3:1)Floor space(5:4:1:2)Value of Assets(10:5:3:1)H.P. of machine(10:5:4:1)No. of workers(100:50:50:25)Light points(25:15;10:10)

5,00015,00095,000

18,000

7,600

10,000

5,400

2,400

------

50,000

7,500

4,000

5,000

2,400

1,000

------

25,000

6,000

2,000

2,500

1,200

600

3,00010,00015,000

1,500

1,200

2,000

1,200

400

2,0005,0005,000

3,000

400

500

600

400

1,58,400 69,900 37,300 34,300 16,900

Re-distribution of expenses of service department ‘C’ Rs. 12,000 to D and balance of Rs. 22,300 to A:B= 3:2 Re-distribution of expenses of service Department “D” to A:B = 9:1

+13,380 +8,920 (-) 34,300 +12,000

83,280

26,010

46,220

2,890

Nil

---

28,900

(-)28,900

Allocated overhead total 1,09,290 49,110 Nil Nil

Page 90: foh distribution

thanks

Page 91: foh distribution

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