Costing and Decision-making: Absorption Total) Costing 2504 Jun 2002 Margam Question 2 2 Margam plc has estimated the following factory indirect costs for its next finanoial yoar. Indiroct wages Repairs and maintenance Canteon Insurance of machinery Insurance of premises Heating and lighting Consumables 95600 35200 27000 24000 32 500 4900 829 200 The managoment accountant wishes to calculate a suitable overthead absorption rate for each of the two production departmants and the following information is avalabie Production Departments Service Departments Maintenance Canteen Machining 375000 270000 75000 Assembly Machine cost () Direct machino houns Direct labour hours Premises area (square metroa) Number of employees 125000 30000 303000 6400 81 1382 1 600 15 1330 7200 800 48 821 1367 carried out by service departments is: The proportion of work Machining Assombly Maintenance Canteen 25 Maintonane (%) Canteen (%) 75 30 15 The ectual results for the year wero as follows: Factory indirect costs (E) Direct machine hours Direct labour hours 397 100 275000 412600 20500 290000 78000