AIOU 0462 Solved Assignments Spring 2025

AIOU 0462 Cost Accounting Solved Assignment 1 Spring 2025

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AIOU 0462 Assignment 1

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Q1 a). Define Cost Accounting. State the merits of cost accounting.

Definition of Cost Accounting:

Cost accounting is a branch of accounting that focuses on recording, analyzing, and controlling costs associated with production and business operations. It helps organizations determine the cost of their products or services, evaluate efficiency, and make informed financial decisions.

Merits of Cost Accounting:

Cost Control: Identifies inefficiencies and helps reduce unnecessary expenses.

Profit Maximization: Assists in determining pricing strategies to maximize profit margins.

Budgeting and Planning: Provides reliable data for creating budgets and financial forecasts.

Decision-Making: Helps management make informed decisions about product pricing, production methods, and resource allocation.

Competitive Advantage: Improves cost management, making businesses more competitive in the market.

Performance Evaluation: Enables businesses to assess the profitability of different departments, products, or projects.

Inventory Management: Ensures proper valuation of stock and efficient control over materials used in production.

Prevention of Fraud and Errors: Enhances accountability and reduces financial discrepancies in the company.

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Q1 b). Describe the elements of Manufacturing Cost. Describe the classification of Costs regarding recording in Financial Statements.

Manufacturing costs refer to the expenses incurred in the process of producing goods. These costs are classified into three main elements:

Direct Materials: The raw materials that are directly used in the production of finished goods. These are tangible inputs that become part of the final product.

Direct Labor: The wages and salaries paid to workers who are directly involved in the manufacturing process, such as machine operators and assembly line workers.

Manufacturing Overheads: Indirect costs associated with production that cannot be directly traced to specific units of production. These include factory rent, utilities, equipment maintenance, and depreciation.

Classification of Costs in Financial Statements:

Product Costs: These include direct materials, direct labor, and manufacturing overheads. Product costs are initially recorded as inventory and recognized as cost of goods sold when the products are sold.

Period Costs: These are non-manufacturing expenses, such as selling, administrative, and general expenses. They are recorded as expenses in the income statement in the period in which they are incurred.

Fixed and Variable Costs: Fixed costs remain unchanged regardless of production levels (e.g., factory rent), while variable costs fluctuate with production activity (e.g., raw materials).

Direct and Indirect Costs: Direct costs can be traced to a specific product (e.g., direct labor), whereas indirect costs are shared across multiple products (e.g., factory overheads).

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Q2. The following data pertains to Yellow Corporation for the period ended on 31st December 2024:

Inventories:	31-12-24	1-1-24
Direct Material	237,500	225,000
Work in Process	200,000	175,000
Finished Goods	237,500	275,000
Cost Incurred During the Period:
Direct Material Used	492,500
Cost of Goods Available for Sales	1,610,000
Factory Overheads	517,500
Total Manufacturing Cost	1,480,000

Required: Prepare Cost of Goods Manufacturing and Sold Statement.

Yellow Corporation Cost of Goods Manufactured and Sold Statement For the Period Ended December 31, 2024
Direct Materials:
Beginning Direct Material Inventory (January 1, 2024)	$225,000
Direct Material Used	$492,500
Ending Direct Material Inventory (December 31, 2024)	($237,500)
Cost of Direct Materials Used	$480,000
Direct Labor	Included in Total Manufacturing Cost
Factory Overhead	$517,500
Total Manufacturing Cost	$1,480,000
Beginning Work in Process Inventory (January 1, 2024)	$175,000
Ending Work in Process Inventory (December 31, 2024)	($200,000)
Cost of Goods Manufactured	$1,455,000
Beginning Finished Goods Inventory (January 1, 2024)	$275,000
Cost of Goods Available for Sale	$1,610,000
Ending Finished Goods Inventory (December 31, 2024)	($237,500)
Cost of Goods Sold	$1,372,500

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Q3 a). Describe the contents of a Job Order Cost Sheet and the benefits which can be reaped out of it by an enterprise.

A Job Order Cost Sheet is a crucial document used in job order costing systems to track the costs associated with specific jobs or projects. It helps businesses monitor expenses, determine pricing, and analyze profitability.

Contents of a Job Order Cost Sheet:

Job Details:

- Job Number or Code

- Description of the Job

- Customer Name

- Order Date and Completion Date

Direct Materials Cost:

- List of materials used

- Quantity and cost of materials consumed

- Total materials cost

Direct Labor Cost:

- Hours worked by employees on the job

- Hourly wage rates

- Total labor cost

Factory Overhead Cost:

- Allocation of indirect costs (utilities, depreciation, rent, etc.)

- Overhead applied based on a predetermined rate

Total Cost Calculation:

- Sum of direct materials, direct labor, and factory overhead

- Cost per unit (if applicable)

Selling Price and Profit Analysis:

- Markup or profit margin applied

- Final selling price of the job

Benefits for an Enterprise:

Accurate Cost Tracking: Helps businesses monitor costs effectively, ensuring profitability.

Efficient Budgeting: Facilitates better financial planning for materials, labor, and overhead.

Improved Pricing Decisions: Enables businesses to set competitive yet profitable prices.

Enhanced Cost Control: Helps identify areas where costs can be minimized for efficiency.

Profitability Analysis: Allows businesses to evaluate the success of various jobs and projects.

Support for Financial Reporting: Ensures detailed records for audits, taxation, and financial statements.

This tool is indispensable in manufacturing, construction, and service industries, ensuring that each job is thoroughly analyzed for profitability.

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Q3 b). The following transactions were conducted during the month of September, you are required to record the above transactions in the general journal:

i. Material costing Rs. 550,000 was purchased.

ii. Direct Material costing Rs. 358,000 was issued to production for various jobs. The indirect material and supplies costing Rs. 22,000 were also issued.

iii. The payroll for the month of September amounted to Rs. 380,000 from which Provident Fund of Rs. 18,000 and Income Tax of Rs. 15,000 was deducted. The due amount of payroll was paid to the workers and employees.

iv. The payroll was allocated as under:
Direct Labour Rs. 275,000
Indirect Labour Rs. 24,000
Marketing staff Rs. 55,000
Admin. Staff Rs. 26,000

v. The Factory Overhead was applied at 70% of the direct labour cost.

Date	Account Titles and Explanation	Debit (Rs.)	Credit (Rs.)
Sep.	i. Material Purchase Raw Materials Inventory Accounts Payable (To record the purchase of raw materials)	550,000	550,000
	ii. Material Issuance to Production Work-in-Process Inventory - Direct Materials Factory Overhead - Indirect Materials Raw Materials Inventory (To record the issuance of materials to production)	358,000 22,000	380,000
	iii. Payroll for the Month Salaries and Wages Expense Provident Fund Payable Income Tax Payable Cash (To record the payroll and related deductions, and payment)	380,000	18,000 15,000 347,000
	iv. Payroll Allocation Work-in-Process Inventory - Direct Labour Factory Overhead - Indirect Labour Marketing Expense Administrative Expense Salaries and Wages Expense (To allocate the payroll costs)	275,000 24,000 55,000 26,000	380,000
	v. Factory Overhead Applied Work-in-Process Inventory - Applied Overhead Factory Overhead (To record the factory overhead applied at 70% of direct labour cost: 70% * Rs. 275,000 = Rs. 192,500)	192,500	192,500

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Q4. Department 2 of Sunrise’s costs for May 2024 were extracted from the cost accounting record as under:

Cost from Department 1. - Rs. 320,000
The cost incurred by Department 2.
Materials - Rs. 360,000
Labour - Rs. 206,250
Factory overheads - Rs. 123,750

The record shows that 12,000 units were received during the month from Department 1. Department 2 transferred 7,000 units to the Finished Goods Warehouse. The work in process at the end of May was 5,000 units which were 100% complete as to the material cost but only 25% were complete as to the conversion cost. Required: Prepare a cost of production report for department 2.

Sunrise
Cost of Production Report - Department 2
For the Month Ended May 31, 2024

Quantity Schedule
Particulars	Units
Units received from Department 1	12,000
Units transferred to FG Warehouse	7,000
Work in process, ending	5,000
Total Units Accounted For	12,000

Cost Schedule
Cost Element	Total Cost (Rs.)	Equivalent Units	Cost per Equivalent Unit (Rs.)
Costs Received from Dept. 1	320,000	12,000	26.67
Costs Incurred in Dept. 2
Materials	360,000	12,000	30.00
Labour	206,250	8,250	25.00
Factory Overheads	123,750	8,250	15.00
Total Costs Accounted For	1,010,000
Equivalent Units Calculation: Materials: Units Transferred (7,000) + Ending WIP (5,000 x 100%) = 12,000 units Conversion Costs (Labour and Factory Overheads): Units Transferred (7,000) + Ending WIP (5,000 x 25%) = 8,250 units

Cost Assignment
Particulars	Units	Cost per Unit (Rs.)	Total Cost (Rs.)
Cost of Units Transferred to FG Warehouse	7,000
Cost from Department 1		26.67	186,690
Materials		30.00	210,000
Labour		25.00	175,000
Factory Overheads		15.00	105,000
Total Cost Transferred			676,690
Cost of Ending Work in Process	5,000
Cost from Department 1		26.67	133,350
Materials		30.00	150,000
Labour		25.00	31,250
Factory Overheads		15.00	18,750
Total Cost of Ending WIP			333,350
Total Costs Accounted For			1,010,040

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Q5 a). Draw formats of some proformas usually followed in the organization right from initiating a requirement to consumption relating to the materials.

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Q5 b). The quarterly requirement of some modules of Shan Engineering Company for manufacturing water pumps is 1,200 units. The cost per module is Rs. 120. The Ordering Cost is Rs. 800 while the Carrying Cost of the average inventory investment is 20%.

Required: Compute the following:
A) Economic Order Quantity.
B) A Total number of orders to be placed in a year based on EOQ modelling.
C) Frequency of orders in days.
D) Annual Ordering Cost.
E) Annual Inventory Cost.

Given Data:

Quarterly Requirement = 1,200 units

Annual Requirement = 1,200 × 4 = 4,800 units

Cost per Module = Rs. 120

Ordering Cost = Rs. 800

Carrying Cost = 20% of cost per module = 0.2 × Rs. 120 = Rs. 24 per unit per year

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A) Economic Order Quantity (EOQ)

EOQ is calculated using the formula:

\[ EOQ = \sqrt{\frac{2DS}{H}} \]

Where: D = Annual Demand = 4,800 units

S = Ordering Cost = Rs. 800

H = Holding Cost per unit per year = Rs. 24

\[ EOQ = \sqrt{\frac{2 \times 4,800 \times 800}{24}} = \sqrt{\frac{7,680,000}{24}} = \sqrt{320,000} ≈ 565 units \]

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B) Total Number of Orders in a Year

\[ \text{Total Orders} = \frac{Annual Demand}{EOQ} = \frac{4,800}{565} ≈ 8.5 \text{ orders per year} \]

Since you can’t place half an order, you may round this accordingly.

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C) Frequency of Orders in Days

\[ \text{Order Frequency} = \frac{365}{\text{Total Orders}} = \frac{365}{8.5} ≈ 43 \text{ days} \]

So, an order should be placed approximately every 43 days.

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D) Annual Ordering Cost

\[\text{Total Ordering Cost} = \text{Total Orders}\times S = 8.5 \times 800 = Rs. 6,800\]

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E) Annual Inventory Cost

\[\text{Total Inventory Cost} = \frac{565}{\text{2}} \times 24 = 6,780\]

Final Summary:

EOQ: 565 units

Total Orders per Year: 8.5 (rounded accordingly)

Order Frequency: Every ~ 43 days

Annual Ordering Cost: Rs. 6,800

Annual Inventory Cost: Rs. 6,780

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AIOU 0462 Cost Accounting Solved Assignment 2 Spring 2025

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AIOU 0462 Assignment 2

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Q1. The Universal Garment Factory is producing Job No. 15 which comprises 2,000 dresses of style A-1. The following costs were incurred for this production:

Direct Materials cost - Rs.200 per dress
Direct Labour costs - Rs.120 per dress
Factory Overheads cost - Rs.160 per dress

When the lot was completed, the Quality Control department rejected 20 dresses after inspection which were considered spoiled dresses and were later disposed of for Rs.150 per dress as seconds.

Required:
A) Pass journal entries if the loss from spoiled dresses is charged to the relevant job.
B) Pass journal entries if the loss from spoiled dresses is charged to all production.

A) Journal entries if the loss from spoiled dresses is charged to the relevant job:

First, let's calculate the cost of the spoiled dresses:

• Number of spoiled dresses: 20
• Cost per dress (Direct Materials + Direct Labour + Factory Overheads): Rs. 200 + Rs. 120 + Rs. 160 = Rs. 480
• Total cost of spoiled dresses: 20 dresses * Rs. 480/dress = Rs. 9,600
• Recovery from sale of spoiled dresses: 20 dresses * Rs. 150/dress = Rs. 3,000
• Net loss from spoiled dresses: Rs. 9,600 - Rs. 3,000 = Rs. 6,600

Now, let's pass the journal entries:

1. To record the cost of spoiled dresses:

Account	Debit	Credit
Work-in-Process Control (Job No. 15)	Rs. 9,600
Spoiled Goods Inventory		Rs. 9,600
(To record the cost of spoiled dresses)

2. To record the sale of spoiled dresses:

Account	Debit	Credit
Cash/Accounts Receivable	Rs. 3,000
Spoiled Goods Inventory		Rs. 3,000
(To record the sale of spoiled dresses)

3. To record the loss from spoiled dresses charged to the specific job:

Account	Debit	Credit
Loss from Spoiled Goods (Job No. 15)	Rs. 6,600
Work-in-Process Control (Job No. 15)		Rs. 6,600
(To transfer the net loss from spoiled goods to the specific job)

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B) Journal entries if the loss from spoiled dresses is charged to all production:

The initial entries for recording the cost and sale of spoiled dresses remain the same:

1. To record the cost of spoiled dresses:

Account	Debit	Credit
Factory Overhead Control	Rs. 9,600
Spoiled Goods Inventory		Rs. 9,600
(To record the cost of spoiled dresses)

Note: Here, we debit Factory Overhead Control instead of Work-in-Process because the loss will be treated as an overhead cost applicable to all production.

2. To record the sale of spoiled dresses:

Account	Debit	Credit
Cash/Accounts Receivable	Rs. 3,000
Spoiled Goods Inventory		Rs. 3,000
(To record the sale of spoiled dresses)

3. To record the net loss from spoiled dresses as a factory overhead:

Account	Debit	Credit
Factory Overhead Control	Rs. 6,600
Loss from Spoiled Goods		Rs. 6,600
(To recognize the net loss from spoiled goods as a factory overhead)

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Q2. Describe the three methods of costing of material issuance to production. What are the advantages and disadvantages of FIFO and LIFO costing methods? Explain.

There are three primary methods used for costing material issuance to production:

First-In, First-Out (FIFO)

Under the FIFO method, materials that are issued to production are taken from the oldest available inventory. The assumption here is that the first goods acquired are the first to be used.

Advantages of FIFO:

- Reflects current market prices: Since older inventory is used first, remaining stock reflects current purchase costs.

- Avoids obsolescence: Older materials are used before newer ones, reducing the chance of materials becoming outdated.

- Accepted by most accounting standards: FIFO is allowed under both IFRS and GAAP.

Disadvantages of FIFO:

- Higher tax liability in inflationary periods: Since older materials with lower costs are issued first, profits appear higher, leading to increased tax liabilities.

- Mismatch between cost and revenue: In periods of inflation, the cost of materials issued may not match revenue, affecting profitability analysis.

- Inventory valuation complexity: If prices fluctuate significantly, tracking FIFO layers can be complex.

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Last-In, First-Out (LIFO)

With LIFO, the newest materials purchased are issued first, meaning older stock remains in inventory longer.

Advantages of LIFO:

- Tax benefits during inflation: Since newer materials with higher costs are issued first, reported profits are lower, reducing tax obligations.

- Better matching of costs and revenue: The cost of materials issued reflects current market prices, aligning expenses with sales revenue more accurately.

- Beneficial in industries with rapid price fluctuations: Companies in industries like commodities or raw materials benefit from LIFO during rising prices.

Disadvantages of LIFO:

- Inventory distortion: Older materials remain in inventory, potentially causing outdated stock.

- Not allowed under IFRS: Many international companies cannot use LIFO due to regulatory restrictions.

- Complex record-keeping: Managing LIFO inventory requires detailed tracking, making it administratively demanding.

Weighted Average Cost (WAC)

In the WAC method, the cost of issued materials is calculated based on the average cost of all inventory available at that point.

Advantages of WAC:

- Simplifies cost allocation: No need to track individual purchases; inventory costs are averaged.

- Smooths cost fluctuations: Sudden price changes do not drastically affect issued material costs.

- Accepted under IFRS and GAAP: Many businesses prefer WAC for compliance and efficiency.

Disadvantages of WAC:

- Less precise than FIFO or LIFO: Actual costs of materials may differ from recorded values.

- Potential inventory valuation challenges: If price variations are high, WAC may not accurately reflect actual costs.

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Q3 a). Describe the functions of a Timekeeping department and various methods used for controlling the attendance of workers in a factory.

The Timekeeping department plays a crucial role in managing employee attendance and ensuring accurate wage calculation in a factory setting. Below is a detailed explanation of its functions and various methods used for controlling attendance.

Functions of a Timekeeping Department:

- Recording Attendance: Maintains records of employees’ check-in and check-out times. Tracks absences, tardiness, and leaves.

- Wage Calculation: Ensures accurate computation of wages based on recorded work hours. Facilitates overtime payment calculations.

- Monitoring Productivity: Assists in analyzing workforce efficiency by providing attendance data. Helps managers optimize labor allocation.

- Compliance with Labor Laws: Ensures adherence to legal requirements for working hours and breaks. Keeps records for audits and inspections.

- Control of Unauthorized Absences: Identifies trends in absenteeism. Implements disciplinary actions for habitual offenders.

- Improving Workplace Discipline: Encourages punctuality and responsibility among workers. Minimizes disruptions caused by attendance inconsistencies.

Methods for Controlling Attendance:

Factories use different techniques to regulate worker attendance effectively. Some common methods include:

- Manual Attendance Register: Employees sign an attendance book at the start and end of their shift. Simple method but prone to errors and manipulation.

- Punch Card System: Workers use time cards to record their check-in and check-out times. A clocking device stamps the exact time, reducing human error.

- Biometric Attendance System: Uses fingerprint, facial recognition, or iris scan to authenticate employee check-ins. Prevents buddy punching and unauthorized access.

- Digital Swipe Cards: Employees scan RFID-enabled cards to record entry and exit times. Provides automated and real-time tracking.

- Mobile-Based Attendance Apps: Workers check in using factory-approved mobile applications. Useful for remote work situations or multi-location factories.

- Surveillance and Workplace Monitoring: CCTV cameras monitor worker presence in designated zones. Ensures compliance with attendance policies.

- Supervisor-Based Monitoring: Shift supervisors manually verify worker presence. Best for small factories with a limited workforce.

Each method has its advantages and challenges depending on the factory size, security needs, and regulatory requirements.

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Q3 b). Roshan Steel Products Industries is applying a differential piece rates work system for labor payment. The differential rates applied are 80% piece rate below standard and 120%-piece rate at or above standard. The standard allowed is 10 units per hour. The normal wage rate is Rs. 70 per hour. Abrar completed 100 units while Badar completed 80 units in a day. The workers are required to work for 9 hours daily.
Required: Compute earnings of the day of both workers under a differential piece rate work system.

Given Data:

Standard Output: 10 units per hour

Working Hours: 9 hours daily

Total Standard Output per Day: 10 × 9 = 90 units

Normal Wage Rate: Rs. 70 per hour

Piece Rate (Below Standard): 80% of normal rate

Piece Rate (At or Above Standard): 120% of normal rate

Step 1: Calculate Piece Rates

Normal Piece Rate per Unit: (Rs. 70 × 9) / 90 = Rs. 7 per unit

Below Standard Rate: 80% of Rs. 7 = Rs. 5.6 per unit

At or Above Standard Rate: 120% of Rs. 7 = Rs. 8.4 per unit

Step 2: Compute Earnings

Abrar (Completed 100 units)

Since Abrar completed 100 units, which is above standard (90 units), he gets paid at 120% of normal rate.

Earnings: 100 × Rs. 8.4 = Rs. 840

Badar (Completed 80 units)

Since Badar completed 80 units, which is below standard (90 units), he gets paid at 80% of normal rate.

Earnings: 80 × Rs. 5.6 = Rs. 448

Final Earnings:

Abrar earns Rs. 840

Badar earns Rs. 448

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Q4. The normal operating capacity of Faiza Chemical Industries is 250,000 machine hours per month. At this level of activity, the fixed factory overhead cost is estimated at Rs. 500,000 and variable overhead is estimated at Rs. 250,000. During April 2014, the actual production consumed 240,000 machine hours and the actual factory overhead cost amounted to Rs. 730,000.

Required:
a) Determine the fixed portion of the factory overhead application rate.
b) Determine the variable portion of the factory overhead application rate.
c) Compute the amount of over or under-applied factory overhead cost.
d) Calculate the amount of favourable or unfavourable Spending Variance.
e) Work out the amount of favourable or unfavourable idle capacity variance.

Given Data:

Normal Operating Capacity: 250,000 machine hours

Fixed Factory Overhead Cost: Rs. 500,000

Variable Overhead Cost: Rs. 250,000

Actual Machine Hours Used: 240,000

Actual Overhead Cost: Rs. 730,000

Step 1: Determine Fixed Factory Overhead Application Rate

Fixed overhead rate = Fixed Overhead / Normal Operating Capacity

= Rs. 500,000 / 250,000 hours

= Rs. 2 per machine hour

Step 2: Determine Variable Factory Overhead Application Rate

Variable overhead rate = Variable Overhead / Normal Operating Capacity

= Rs. 250,000 / 250,000 hours

= Rs. 1 per machine hour

Step 3: Compute Over or Under-Applied Overhead Cost

Applied overhead = (Fixed rate + Variable rate) × Actual machine hours

= (Rs. 2 + Rs. 1) × 240,000

= Rs. 720,000

Over or under-applied overhead = Actual Overhead – Applied Overhead

= Rs. 730,000 – Rs. 720,000

= Rs. 10,000 (Over-applied)

Step 4: Calculate Spending Variance

Spending variance = (Actual Overhead – Budgeted Overhead at Actual Hours)

Budgeted overhead at actual hours = (Fixed Overhead + Variable Overhead at Actual Hours)

= Rs. 500,000 + (Rs. 1 × 240,000)

= Rs. 740,000

Spending variance = Rs. 730,000 – Rs. 740,000

= Rs. 10,000 (Favorable)

Step 5: Compute Idle Capacity Variance

Idle capacity variance = (Normal Operating Hours – Actual Hours) × Fixed Overhead Rate

= (250,000 – 240,000) × Rs. 2

= Rs. 20,000 (Unfavorable)

Summary of Results:

Fixed Overhead Rate: Rs. 2 per machine hour

Variable Overhead Rate: Rs. 1 per machine hour

Over-applied Overhead: Rs. 10,000

Spending Variance: Rs. 10,000 (Favorable)

Idle Capacity Variance: Rs. 20,000 (Unfavorable)

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Q5. The Oxford Garments Industries comprises four departments. Cutting, Stitching and Finishing are the Production departments whereas Procurement is the Servicing Department. Actual overhead costs for June 2024 are as under:

Rent - Rs.120,000
Supervision - Rs.30,000
Repair and maintenance - Rs. 12,000
Insurance - Rs.14,000
Depreciation of Plant - Rs. 90,000
Lighting - Rs. 16,000
Power consumption - Rs. 18,000

The following further data is also available in respect of the four departments:

Particulars	Cutting	Stitching	Finishing	Procurement
Square foot area occupied	150	110	90	50
Number of workers	24	16	12	8
Total Wages	Rs. 240,000	Rs. 192,000	Rs. 96,000	Rs. 80,000
Value of Plant	Rs. 200,000	Rs. 600,000	Rs. 100,000	–
Value of Stock	Rs. 150,000	Rs. 90,000	Rs. 60,000	–

Required: Apportion the overhead costs on most equitable basis and prepare the overheads distribution statement.

1. Identify the Overheads:

First, we list all the overhead costs that need to be distributed:

• Rent - Rs. 120,000
• Supervision - Rs. 30,000
• Repair and maintenance - Rs. 12,000
• Insurance - Rs. 14,000
• Depreciation of Plant - Rs. 90,000
• Lighting - Rs. 16,000
• Power consumption - Rs. 18,000

2. Determine the Basis of Apportionment:

For each overhead cost, we need to find the most equitable way to distribute it among the departments. Here's a likely basis for each:

• Rent: Square foot occupied
• Supervision: Number of workers or Total Wages (Let's use Total Wages as it might better reflect the supervisor's effort.)
• Repair and maintenance: Value of Plant
• Insurance: Value of Plant or Value of Stock (Since the nature isn't specified, let's assume it's related to plant.)
• Depreciation of Plant: Value of Plant
• Lighting: Square foot occupied or Number of workers (Let's use Square foot occupied as it relates to the area needing light.)
• Power consumption: Value of Plant or Number of workers (Let's use Value of Plant assuming it's mainly for machinery.)

3. Calculate the Apportionment Rates:

Now, we'll calculate the proportion each department has based on the chosen basis:

Particulars	Cutting	Stitching	Finishing	Procurement	Total
Square foot occupied	150	110	90	50	400
Ratio	150/400 = 0.375	110/400 = 0.275	90/400 = 0.225	50/400 = 0.125	1
Total Wages (Rs.)	240,000	192,000	96,000	80,000	608,000
Ratio	240/608 = 0.395	192/608 = 0.316	96/608 = 0.158	80/608 = 0.132	1
Value of Plant (Rs.)	200,000	600,000	100,000	-	900,000
Ratio	200/900 = 0.222	600/900 = 0.667	100/900 = 0.111	-	1

4. Prepare the Overheads Distribution Statement:

Finally, we distribute the overhead costs based on the calculated ratios:

Overhead Costs	Basis of Apportionment	Total (Rs.)	Cutting (Rs.)	Stitching (Rs.)	Finishing (Rs.)	Procurement (Rs.)
Rent	Square foot occupied	120,000	45,000	33,000	27,000	15,000
Supervision	Total Wages	30,000	11,850	9,480	4,740	3,930
Repair and maintenance	Value of Plant	12,000	2,664	8,004	1,332	-
Insurance	Value of Plant	14,000	3,108	9,338	1,554	-
Depreciation of Plant	Value of Plant	90,000	19,980	60,030	9,990	-
Lighting	Square foot occupied	16,000	6,000	4,400	3,600	2,000
Power consumption	Value of Plant	18,000	3,996	12,006	1,998	-
Total Overheads		300,000	92,618	136,308	50,214	20,930

Explanation:

• For each overhead cost, we multiplied the total cost by the respective department's ratio based on the chosen apportionment basis.
• The Procurement department, being a servicing department, has received a portion of the overheads like Rent, Supervision, and Lighting. These costs will need to be further allocated to the production departments (Cutting, Stitching, and Finishing) in a secondary distribution based on a suitable basis (e.g., number of employees, direct labor hours, etc.), which is not required in this specific question.

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