Question 3.RQ.4: QRS Ltd has three main departments – Casting, Dressing and A...

QRS Ltd has three main departments – Casting, Dressing and Assembly – and has prepared the following production overhead budgets for period 3.

Department                                        Casting          Dressing                Assembly
Production overheads                    £225,000        £175,000               £93,000
Expected production hours             7,500               7,000                     6,200

During period 3, actual results were as follows:

Department                               Casting                   Dressing              Assembly
Production overheads             £229,317                 £182,875              £92,500
Production hours                       7,950                        7,280                    6,696

Requirements

(a) The departmental overhead absorption rates per production hour for period 3 are:
Casting              £  \boxed{ \ \ \ \ \ \ \ \ \ \ \ \ }
Dressing           £   \boxed{ \ \ \ \ \ \ \ \ \ \ \ \ }
Assembly          £   \boxed{ \ \ \ \ \ \ \ \ \ \ \ \ }

(b) (i) The overheads in the Casting department were (tick the correct box and insert the
value of the over-/under-absorption):
under-absorbed \square        over-absorbed \square
by £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ \ }

(ii) The overheads in the Dressing department were (tick the correct box and insert the value of the over-/under-absorption):
under-absorbed \square        over-absorbed \square
by £ \boxed{ \ \ \ \ \ \ \ \ \ \ \ \ }

(c) The overheads in the Assembly department were over-absorbed. Which of the following factors contributed to the over absorption?
\square   the actual overheads incurred were lower than budgeted.
\square   the actual production hours were higher than budgeted.