Mycroft Pumps Limited is a small manufacturing company producing

Mycroft Pumps Limited is a small manufacturing company producing a variety
of pumps for the oil industry. It operates from one factory which is geographically
separated from its head office. The components for the pumps are assembled in the
Assembly Department, and they are then passed through to the Finishing
Department where they are painted and packed. These two production departments
are then supported by three service departments – Administration, Stores, and Work
Study.
The following costs were collected for the year to 30 June 2020
Allocated cost centre overhead costs £000
Administration 70
Assembly 25
Finishing 9
Stores 8
Work Study 18
Additional information:
1 The allocated overhead costs are considered to be indirect and not linked to
specific numbers of units.
2 During the year to 30 June 2020, 35,000 machine hours were worked in the
Assembly Department, and 60,000 direct labour hours in the Finishing Department.
3 The number of employees working in each department was as follows:
Administration = 15 Assembly = 25
Finishing = 40 Stores = 2
Work Study = 3 Total Employees = 85
4 During the year to 30 June 2020, the stores received 15,000 requisitions from
the Assembly Department, and 10,000 requisitions form the Finishing Department.
The Stores Department did not provide a service for any other department.
5 The Work Study Department carried out 2,000 chargeable hours for the
Assembly Department, and 1,000 chargeable hours for the Finishing Department.
6 One special pump (code named PBM 8) was produced during the year to 30
June 2020 – it took 10 machining hours of Assembly Department time, and 15 direct
labour hours were worked on it in the Finishing Department. Its total direct costs
(material and labour) amounted to £100.
Using the above information:
(i) Calculate an appropriate overhead absorption rate for both the
Assembly Department and the Finishing Department.
(ii) Calculate the Total factory cost of the special pump.
(7 marks)
Department of Mechanical and Construction Engineering
Learning and Teaching
24-Hour Timed Assessment Cover Sheet
MCE | Department Education Board Version 1.0 | Page 6
Please apportion overheads on the following basis:
Allocated costs – by direct allocation.
Administration Overheads – by number of employees (neglect Administration
employees in any apportionment).
Stores overheads – by number of requisitions.
Work Study overheads – by number of chargeable hours.
Please reproduce the following table Q2a to demonstrate the derivation of your
answers:
Production Department Service Department
Cost Centre Assembly Finishing Administration Stores Work Study
£000 £000 £000 £000 £000
Allocated costs
Apportion
Administration
Apportion Stores
Apportion Work Study
Total Overhead
Table Q2a
Clearly explain your workings and give a brief explanation as to how your values in
the table have been calculated (maximum 150 words).