Overheads
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John Smith owns a small manufacturing firm, Smith's Spoons, which produces wooden spoons. The production overhead budgets have been prepared. Cost centre expenses and related information have been budgeted as follows: {see attachment}
(a) Determine budgeted overhead absorption rates for each of the production departments, using bases of apportionment and absorption that you consider most appropriate from the information provided.
(b) If actual activity is as follows {in the attachment}, calculate the amount of under/over-absorption of production overheads for all three cost centres, giving reasons for any under/over absorption of the overheads.
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Solution Summary
The solution determines budgeted overhead absorption rates for each of the production departments and calculates the amount of under/over-absorption of production overheads for all three cost centers.
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