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The annual overhead costs for the Enterprise Company, which has three production centres (two machine centres and one assembly centre) and two service centres (material procurement and general factory support) are as follows: Indirect wages and supervision Machine Centre X Y Assembly Material Procurement General Factory Indirect Materials Machine Centre X Y Assembly Material Procurement General Factory Support Lighting and heating Property Taxes Insurance of Machinery Depreciation of Machinery Insurance of Building Salaries of works management 1,000,000 1,000,000 1,500,000 1,100,000 1,480,000 500,000 805,000 105,000 0 10,000 500,000 1,000,000 150,000 1,500,000 250,000 800,000

6,080,000

1,420,000

4,200,000 11,700,000

The following information is also available:
Book Value Of Machinery Area Occupied Sq Metres No of employees Direct Labour Hours Machine Hours

Assembly Stores Maintenance

Machine Shop X Y

8,000,000 5,000,000 1,000,000 500,000 500,000 15,000,000

10,000 5,000 15,000 15,000 5,000 50,000

300 200 300 100 100 1,000

1,000,000 1,000,000 2,000,000

2,000,000 1,000,000

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Details of total material issues (i.e. direct and indirect materials) to the production centres are as follows: Machine Shop X Machine Shop Y Assembly 4,000,000 3,000,000 1,000,000 8,000,000

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Production Watch! There is a trick here. Area Book Value No. of Employees Material Issued Direct Labour Hours Machine Machine Centre X Centre Y 10,000 5,000 20.0% 10.0% 8,000,000 5,000,000 53.3% 33.3% 300 200 30.0% 20.0% 4,000,000 3,000,000 50.0% 37.5% 1,000,000 1,000,000 25.0% 25.0%