a)Define blanket overhead rates and discuss their use in management accounting. You should also consider the limitations of blanket overhead rates in your discussion. (5 marks)

b)Examine the purpose of departmental overhead rates and consider the advantages of departmental overhead rates compared to blanket overhead rates. (5 marks)

The manufacturing overheads for Pakistani Perfect Produce Plc, located in Lahore, for the year ending 30thApril 2021 are as follows:

PKR Rent, rates, heat, light 3,000,000 Depreciation of machinery 1,100,000 Supervisory salaries 1,250,000 Total 5,350,000Purple White Selling price per unit PKR 175 PKR 187.50 Direct material cost per unit PKR 50 PKR 60 Direct labour hours per unit 2.5 hours 2 hours Total units produced and sold 225,000 units 130,000 units Labour charge per hour is PKR 22.50.Dept. A Dept. B Dept. C Total Number of 40,000 50,000 35,000 125,000 employees Value of fixed PKR 2,000,000 PKR 1,600,000 PKR 800,000 PKR 4,400,000 assets