This is the case study i did in my semester for Management accounting and finance 2a also called cost and management accounting and i hope it will benefit you. Please leave a review.
PROGRAMME Bachelor of Commerce in Accounting
MODULE Cost and Management Accounting
YEAR Two (2)
INTAKE January 2024 Semester 1
MARKS 30
, QUESTION 1 (20 Marks)
A Cape Town-based manufacturing firm, CGH Manufacturing Enterprises (CGHME), has three production departments
(A, B and C) and the two service departments (X and Y). As part of the budgeting process, a senior cost accountant
employed by CGHME has gathered the following annual overhead costs:
R
Indirect materials:
Production department A 250 000
Production department B 402 500
Production department C 52 500
Service department X 10 000
Service department Y 50 000
Indirect labour:
Production department A 500 000
Production department B 500 000
Production department C 750 000
Service department X 550 000
Service department Y 740 000
Heating and lighting 350 000
Property tax 400 000
Insurance of machinery 180 000
Depreciation of machinery 960 000
Insurance of buildings 145 000
Salaries of works management 4 600 000
The following information is also available:
Carrying value of Floor area Number of Machine hours
machinery, R occupied (m2) employees
Production department A 4 000 000 5 000 150 1 000 000
Production department B 2 500 000 2 500 100 800 000
Production department C 500 000 7 500 150 850 000
Service department X 250 000 7 500 50
Service department Y 250 000 2 500 50
7 500 000 25 000 500
As an accounting intern in the office of the senior cost accountant, you have been asked to prepare an overhead allocation
statement (using traditional costing). You have been asked to use the repeated distribution method to prepare the
secondary allocation of the overheads of the two service departments (X and Y) to the three production departments (A,
B and C) according to the following percentages:
Secondary allocation: A B C X Y
Percentage of service department X to 20 40 30 - 10
Percentage of service department Y to 40 20 20 20 -
The three production departments (A, B and C) absorb overheads on machine hour basis.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller athidikana803. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R50,00. You're not tied to anything after your purchase.
