Problem:
Kumaresh Ltd. has three production departments A, B and C and two service departments D and E. The following figures are extracted from the records of the company:
|
Rs
|
|
Rent and rates
|
5,000
|
|
Indirect wages
|
1,500
|
|
Depreciation of machinery
|
10,000
|
|
General lighting
|
600
|
|
Power
|
1,500
|
|
Sundries
|
10,000
|
The following further details are available:
|
Total
|
A
|
|
|
|
|
|
Floor space (square feet)
|
10,000
|
2,000
|
2,500
|
3,000
|
2,00
|
500
|
|
Light points
|
60
|
10
|
15
|
20
|
10
|
5
|
|
Direct wages (Rs)
|
10,000
|
3,000
|
2,000
|
3,000
|
1,500
|
500
|
|
HP 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 departments on the most equitable basis by preparing a primary departmental distribution summary.
Note: Direct wages of service departments are also included in the distribution summary since they should also be reapportioned to the production departments and then finally be absorbed by the output. Ignoring the direct wages of service departments will result in unabsorbed expenses.