Cost and management subject

Jeera Company has three production cost centres (P1, P2 and P3) and two service cost centres (S1 and S2) in its factory. The actual production overhead costs for a period, totalling $487,430, have been allocated and apportioned to cost centres as follows: Production cost centre Service cost centre P1 P2 P3 S1 S2 $176,860 $96,250 $134,770 $42,150 $37.400 The overheads of service cost centre S1 are reapportioned on the basis of the number of materials requisioon notes (MRN) raised in the period. The overheads of service cost centre S2 are reapposioned on the basis of the number of employees in the other cost centres The following additional actual information is available for the period: Cost centre Number of employees Number of MRNS P1 20 4,970 P2 25 3,550 P3 50 5,680 8 S2 S1 5 The predetermined production overhead rates for the period, used to absorb overheads based on P1 Machine hour P2 Direct labour hour P3 Direct labour hour Machine hours and direct labour hours in each production cost centre are: Ace 321 - Ovarhead Tretoriat Austions Cost centre P1 P2 P3 Required: Machine hours Applied Actual 8,100 8,250 1.960 1,880 3,610 3,720 Direct labour hours Applied Actual 3,650 3,680 8,650 8,440 15,600 15,990 a) Reapportion the service cost centre overheads. Compute the overhead absorption rate for the production department. b) (7 marks) (4 marks) (to be done after Job costing topic) Compute the amount of any over or under absorption of overheads for each production cost centre. (5 marks) Explain the accounting treatment of over and under absorption of overheads. (4 marks) d)