a)Explain the terms overhead allocation, overhead apportionment and overhead absorption

b)Azu Company Limited is divided into four (4) cost centers.

That is A, B, as production departments and Human Resource & Repairs as service departments The actual cost of a period is as follows

A B HR Repairs

GHS GHS GHS GHS

Indirect materials 35 150 - 25

Maintenance wages 160 250 300 325

Other overheads as follows:

GHS

Supervision 1500

Power 1800

Rent 300

Repairs of plants 1200

Depreciation of plants 850

Depreciation of building 720

The following information is available in respect of the departments:

A B HR Repairs

Area occupied in square feet 1500 1100 900 500

Number of employees 20 15 10 5

Value of plant 6000 4500 3000 1500

HZ Power 10000 9000 6000 5000

Required

1. Prepare an overhead analysis sheet by the most reasonable approach and estimate the overhead cost incurred in each cost center

2. Department A & B are production departments whereas HR & Repairs are there to service these production departments. Assume these two service departments do not render any service to each other. Using equitable and fair as appropriate as possible re-apportion the HR & Repairs overheads to the production departments