Stellar Showers Co. Ltd manufactures domestic electric showers. It moulds its own plastic casings but buys in the other components from a variety of sources. In addition to 54 production operatives, it employs two quality controllers and four stores operatives. The company’s production facility consists of three production cost centres (moulding, assembly and packaging) and two service cost centres (quality control and material stores). Quality control inspects work in the three production centres as well as goods received into the materials store. The store services the three production centres only.

Stellar’s annual budget lists the following production overheads:..................................................................................................................... £Electricity to run machines and equipment.................................. 40,000Material stores running costs......................................................... 80,000Heating (oil-fired boiler)................................................................... 13,000Lighting................................................................................................. 4,000Supervision........................................................................................ 65,000Production manager........................................................................ 35,000Business rates................................................................................... 16,000Fire insurance.................................................................................... 10,000Quality controllers’ pay..................................................................... 30,000Depreciation (straight line)................................................................ 18,000The supervision overhead consists of an assembly supervisor (£25,000 p.a.), a moulding supervisor (£20,000 p.a.) and a packaging supervisor (£20,000 p.a.). The following information is also available:

Tasks:1.  Calculate the most appropriate overhead absorption rate for each production cost centre.2.  Calculate the unit production cost of an SS40T shower if a batch of 800 uses the following resources:Direct materials................................................. £16,000Direct labour........................................................ £8,800Machine hours in moulding................................. 1,500Machine hours in assembly.................................... 900Machine hours in packaging................................... 170Direct labour hours in moulding.......................... 1,200Direct labour hours in assembly.......................... 3,500Direct labour hours in packaging.......................... 1,000