2.

1. Calculate five different overhead absorption rates for cost centre 17 based on the following budgeted data.

Labor hours for period 1,400

Total direct wages for period 3,600

Total direct materials for period 7,500

Total machine hours for period 2,850

Total units produced for period 535

Total overheads for period 12,900

2. A cost unit has been produced in cost centre 17 and the following details recorded:

Direct materials used 16.50

Direct wages 17.50

Direct labor hours 5.5

Machine hours 8.5

Calculate the costs of this unit using each of the absorption bases calculated.

3. What basis of overhead absorption would you recommend if you are informed that cost centre 17 comprises a number of numerically controlled machine tools with semi-skilled operators and that over half of the cost centres overheads relate to machine depreciation? Give reasons.