PRIMARY DISTRIBUTION OF OVERHEAD
PRIMARY DISTRIBUTION OF OVERHEAD
Problem
Kamal Ltd., has three production departments P1,P2 and
P3 and two service departments s1 and S2. Following figures are extracted from the
records of the company:
1.
Rent and Rates:
Rs.5,000
2.
Indirect wages:
Rs.1,500
3.
Depreciation of
Machinery: Rs.10,000
4.
General
Lightings: Rs.600
5.
Power: Rs.1,500
6.
Sundries:
Rs.10,000
|
|
Total
|
P1 |
P2 |
P3 |
S1 |
S2 |
|
Floor
Space(Sq.meter) |
10,000 |
2000 |
2,500 |
3,000 |
2,000 |
500 |
|
Light
Points |
60 |
10 |
15 |
20 |
10 |
5 |
|
Direct
wages |
10,000 |
3,000 |
2,000 |
3,000 |
1,500 |
500 |
|
H.P.
of Machines |
150 |
60 |
30 |
50 |
10 |
---- |
|
Value
of Machinery(Rs.) |
2,50,000 |
60,000 |
80,000 |
1,00,000 |
5,000 |
5,000 |
|
Apportion
the cost to various department on the most equitable basis by preparing a
Primary Distribution Method |
||||||
|
|
|
Production Department |
Service |
|||
|
|
|
P1 |
P2 |
P3 |
S1 |
S2 |
|
Rent & Rates |
Floor Space (4:5:6:4:5) |
1,000 |
1,250 |
1,500 |
1,000 |
250 |
|
Indirect Wage |
Wages (6:4:6:3:1) |
450 |
300 |
450 |
225 |
75 |
|
Depreciation of Machinery |
Value of Machinery (60:80:100:5:5) |
2,400 |
3,200 |
4,000 |
200 |
200 |
|
General Lightings |
Light points (10:15:20:10:5) |
100 |
150 |
200 |
100 |
50 |
|
Power |
H.P. of Machines (6:3:5:1:0) |
600 |
300 |
500 |
100 |
---- |
|
Sundries |
Direct Wages (6:4:6:3:1) |
3,000 |
2,000 |
3,000 |
1,500 |
500 |
|
Total Cost |
|
7,550 |
7,200 |
9,650 |
3,125 |
1,075 |
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