A company produces several products which pass through the two production departments in its factory. These two departments are concerned with filling and sealing operations. There are two service departments, maintenance and canteen, in the factory.

Predetermined overhead absorption rates, based on direct labor hours, are established for the two production departments. The budgeted expenditure for these departments for the period just ended, including the apportionment of service department overheads, was Rs. 110040 for filling, and Rs. 53300 for sealing. Budgeted direct labor hours were 13100 for filling and 10250 for sealing.

Service department overheads arc apportioned as follows:

Maintenance: Filling70%

Maintenance: Sealing27%

Maintenance: Canteen3%

Canteen:filling60%

sealing32%

maintenance8%

During the period just ended, actual overheads costs and activity were as follows.

Rs. Direct labor hours

Filling 74260 12820

Sealing 38115 10075

Maintenance 25050

Canteen 24375

You are required to:

(i)Calculate the overheads absorbed in the period and the extent of the under/over absorption in each of the two production departments. (10 Marks)

(ii) State and critically assess the objectives of overhead apportionment and absorption

(4 Marks)