Scotty McNish is a sole trader making and selling garden gnomes.
There are 4 cost centres – Moulding, Decorating, Packing and Office.
Next year’s anticipated overhead is as follows:
Lighting and Heat: £20,000
£9,000 in staff support
Equipment Insurance £5,000
The cost centers have the following information at their disposal:
Decorating and Packing Moulding Office Floor Area (sq m) Total Number of Employees 6 10 4 5 25 10,000 7,000 20,000 3,000 40,000
Machines are worth between £30,000 and £100,000
You must complete the following tasks using the Overhead Analysis Sheet on Page 9 of the Workbook: (a) Prepare the Overhead Analysis Sheet to reflect the total estimated overhead allocated to each cost center.
(b) Reassign the Office’s total overhead costs to the other cost centers based on the number of employees.
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