Blisworth & Bexhill Limited produces a vacuum cleaner (its only product) that goes through three departments: moulding, assembly and finishing.The company's total production overheads for the 20X7 financial year are budgeted to be £1 860 420.Normally, the company apportions all its production overheads to the three departments in a 60:20:20 split (moulding: assembly: finishing) based on factory floor area.In order to make the information more useful, the company's management accountant has suggested that canteen and supervision overheads (which amount to £308 560 of the total overhead of £1 860 420) should be apportioned according to the number of direct labour employees.Moulding employs sixteen people, assembly eight, and finishing four (total = 28). If the proposed method of apportionment is adopted by what percentage will the finishing department's overhead be reduced, compared to the normal apportionment method (to one decimal place)?

Question

Quizplus · Accepted Answer

The Answer of Blisworth & Bexhill Limited produces a vacuum cleaner (its only product) that goes through three departments: moulding, assembly and finishing.The company's total production overheads for the 20X7 financial year are budgeted to be £1 860 420.Normally, the company apportions all its production overheads to the three departments in a 60:20:20 split (moulding: assembly: finishing) based on factory floor area.In order to make the information more useful, the company's management accountant has suggested that canteen and supervision overheads (which amount to £308 560 of the total overhead of £1 860 420) should be apportioned according to the number of direct labour employees.Moulding employs sixteen people, assembly eight, and finishing four (total = 28). If the proposed method of apportionment is adopted by what percentage will the finishing department's overhead be reduced, compared to the normal apportionment method (to one decimal place)?

Blisworth & Bexhill Limited Produces a Vacuum Cleaner (Its Only