(a)The following is the budget for the year 2012 from Tembo Ltd

Factory overheadsShs.62,000

Direct labour costShs.98,000

Direct labour hours 155,000

Machine hours 50,000

Actual labour hours were 40,000

Actual machine hours were30,000

Actual direct labour costs were Shs.50,000

Actual direct material costs wereShs.45,000

Required Determine:

a) The overhead application rate on the basis of

i. Direct labour hours

ii. Direct labour cost

iii. Machine hours,

b) Overhead costs based on the absorption rates above

c) Production cost