Coverdrive Ltd Case Study

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  • Topic: 1918, 1925, 1920
  • Pages : 4 (751 words )
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  • Published : April 2, 2013
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Coverdrive Ltd Case Study, Overhead Recovery When John Thistle, the management accountant, joined Coverdrive one of his early projects was a review of the treatment of production overhead and the impact of ABC – Activity Based Costing. Prior to John’s appointment a single overhead recovery rate had been used for the charging of production overhead to the company’s range of products. In a recent meeting with Steve Ambrose, the MD, John discussed the need for separate overhead recovery rates for each producing cost centre. John had prepared a number of schedules based on the current year’s budget. These illustrate the procedure of allocation of apportionment of overhead to the expense centres and the use of this process in determining the recovery rates for each. John had identified the following cost centres: Schedule 1 10 20 30 40 50 60 70 80 Machining Finishing Packing Maintenance Stores Production Control and Inspection Canteen Building occupancy costs

(for all costs associated with the building)

OVERHEAD RECOVERY

Schedule 2 130.00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Production Overheads Indirect Material Indirect Labour Employers NI Employer’s Pension Contribution Repairs and Maintenance (Plant) Repairs and Maintenance (Buildings) Depreciation Plant Depreciation Buildings Small Tools and Consumables Insurance Plant Insurance Buildings Rent and Rates Heat and Light Power Workshop Administration

Schedule 3 Budgeted Production Overhead 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 £ 25,500 95,000 97,700 58,620 40,000 9,375 210,000 20,000 5,750 13,125 10,000 18,275 10,100 75,500 3,200 £692,145

OVERHEAD RECOVERY

Budget Manual Data
Cost Centre Machining Finishing Packing Maintenance Stores Production Control Canteen

Number of employees Direct wages (£) Indirect wages (£) Employers NI 10% of wages Pension contribution 6% of wages Plant and equipment values (£) Indirect materials (£) Area occupied (sq metres) Repairs to plant (£) Direct...
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