Management Accounting
Case Botica
Q1&Q2: Overhead allocation
Service departments
Specific Overheads
Production departments
X
Y
A
B
C
Total
Rent
Allocation
Allocation rate:
Rent / square metres -> 9.6
19200
9600
33600
38400
19200
120000
Plant and equipment
insurance allocation
Depreciation of plant and
equipment allocation
Allocation rate:
Insurance / Equip. value -> 1.25
5000
2500
30000
12500
10000
60000
Allocation rate:
Depreciation / Equip. value -> 3.75
15000
7500
90000
37500
30000
180000
Production controls
supervisor salary
Allocation rate:
Salary / labour hours -> 0.5
0
0
16000
9000
5000
30000
Telephone and computer
costs
Already allocated (as indicated)
2000
1000
5000
4000
3000
15000
41200
20600
174600
101400
67200
405000
12360
30%
10300
25%
10300
25%
41200
5768
20%
8652
30%
14420
50%
28840
192728
120352
91920
405000
32000
18000
10000
6.0228
6.6862
9.1920
Total Costs
Reallocate service Depts to production
Service department X
Based upon percentage rates provided
Service department Y
Based upon percentage rates provided
Total allocations to production departments
Direct labour hours
Allocation rate based on direct labour hours
8240
20%
Q3: Calculation of orders
Direct Materials
Direct Labour:
Labour
Rate
Hours
Worked
A
10
B
Job 1
Job 2
200
100
€
Labour
Rate
Hours
Worked
€
10
100
10
20
200
9
15
135
9
10
90
C
8
5
40
8
10
80
Overheads
A
Rate
6.0228
60.228
120.455
B
6.6862
100.293
66.862
C
9.1920
45.960
91.920
681.48
749.24
Full Cost
Q4: Selling price given
20% profit margin
Full Cost
Sales Price
Sales Margin 20% check
Job 1
Job 2
100%
681.48
749.24
25%
170.37
187.31
125%
851.85
936.55
20.00%
20.00%