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Afurniturebusinessmanufacturesqualityfurnituretocustomers'orders.Ithasthreeproduction departmentsandtwoservicedepartments.Overheadsincurredforthemonthjustendedareas follows: RM Allocated overhead 12,400 Machine insurance 8,000 Rent and rates 21,000 Indirect materials 5,000 Heating and lighting 10,000 Telephone expenses 2,000 Depreciation

Afurniturebusinessmanufacturesqualityfurnituretocustomers'orders.Ithasthreeproduction departmentsandtwoservicedepartments.Overheadsincurredforthemonthjustendedareas follows:

RM

Allocated overhead

12,400

Machine insurance

8,000

Rent and rates

21,000

Indirect materials

5,000

Heating and lighting

10,000

Telephone expenses

2,000

Depreciation

24,000

Supervisors' salaries

6,000

88,400

The three production departments, A, B, and C, and the two service departments, X and Y, are housed in the same premises, the details of which, together with other statistics and information, are given below:

Departments

A

B

C

X

Y

Floor area occupied (sq. metres)

3,000

1,500

1,500

600

400

Direct labour hours

2,000

1,200

1,800

-

-

Labour rates per hour

RM4

RM3

RM2

-

-

Machine value (RM000)

30

20

10

-

-

Value of materials issued (RM000)

100

50

30

-

-

Allocated overheads:

Specific to each department

2,900

3,000

4,000

1,500

1,000

Service department X's cost apportioned

50%

25%

25%

-

-

Service department Y's cost apportioned

20%

30%

50%

-

-

REQUIRED:

  1. Prepareastatementshowingtheoverheadcostforeachdepartment,showingthebasisof apportionmentused.

  1. Calculate suitable overhead absorption rates using the direct labour hoursbases.

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