Homework Help please

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Bpp Excercise Fitwell Ltd. I have allocated and apportioned overheads as I see fit. I have moved service cost centres into production cost centre. I get Total costs for dept1 £158,600 dept2 £156,400. It now asks to calculate the overhead absorption rate on the following
Budgeted labour HRS Dept 1 333 Dept 2 7850
Budgeted machine Hrs Dept 1 6320 Dept 2 1597
I was dividing the total overheads for each dept by the labour hrs and machine hours is that wrong the figures would say so????
Any one help me please
:(

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Homework Help please

    Hi Kate,

    I haven't got a BBP, tell me the nature of each dept or which figure divided by which figure?

    apple
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Homework Help please

    Hi again,

    From which I would,
    Dept 1: BOAR = £158,600 / 7850 lab hrs
    Dept 2: BOAR = £156,400 / 6320 mac hrs

    assumming that by comparing the budgeted hrs, Dept1 used more mac hrs than lab hrs and vs verser.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Homework Help please

    Yes I worked out as follows but this is for an organisation for a complete year thats why the figures don't make sense and I think I may be wrong???

    Dept 1=OAR=158,600/333=476 Budgeted Labour Hours pa
    Dept 2=OAR=156,400/7850=20 Budgeted Labour Hours pa
    Dept 1=OAR=158,600/6320=25 Budgeted Machine Hours pa
    Dept 2=OAR=156,400/1597=98 Budgeted Machine Hours pa

    Any comment kindly received thanks

    Kate
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Homework Help please

    Katetiddy

    I can see you produced 4 values. Is that something the question asked for?

    AppleT only produced one rate per department (which is what I would expect)
    Dept 1: BOAR = £158,600 / 7850 lab hrs
    Dept 2: BOAR = £156,400 / 6320 mac hrs

    assumming that by comparing the budgeted hrs, Dept1 used more mac hrs than lab hrs and vs verser.


    Do you understand what absorption rates are doing?
    By finding them, you are able to charge some of the overhead charged for the department onto the cost of the products it produces and get an idea of the total cost of producing each product.

    Therefore you should only use one rate per department, otherwise you will charge the overhead cost twice and get an inflated idea of the cost of each product.

    sandy.hood@chichester.ac.uk
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Homework Help please

    Hi,
    Yes thanks for your help both it was very helpful to have your opinion. I thought I understood it LOL it was the fact that they gave me four lots of figures and thought I had to use them all. Silly I know but this course is so fast track at the moment and you do work in the class thats appeared ok at the time. Transfering that into questions on excercises is completely different plus I didn't have anyone to ask so having this tool was a big help.

    Again thanks for your time

    Kate
    Hope you are here when I get stuck again!!!!!

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