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(B) DKM Leicester Limited manufactures Student metal beds in three production departments in their Leicester production hub: The departments are Manufacturing, Finishing, and Packaging. DKM Leicester Limited also have three service departments, namely: Quality Control, Stores and Maintenance. The company uses an absorption costing system to analyse product costs, and you have been supplied with the following information in relation to the production departments as indicated in Table 1 below: Table 1 Base Number of employees Machinery value (s) Factory area (square metres) Factory ume (cubic etres) Water usage (litres) Machine hours Manufacturing 20 100,000 218 26,00 15,000 95,000 Finishing 16 75,000 260 44,000 12,000 56,000 Packaging 17 60,000 290 40,000 12,000 26,000 Total 53 235,000 7681 110,000 39,000 177,000 (B1) DKM Leicester Limited estimates to spend 120,000 for heating the factory during the year 2022 financial year, calculate the heating cost that should be allocated to each of the three production departments The following additional information has been supplied in Tables 2 and 3, respectively: Table 2 Manufacturing Finishing Packaging Maintenance Stores Quality control Annual overheads 3,800,000 2,700,000 1,800,000 800,000 850,000 800,000 Table 3: % Usage of service departments Manufacturing Finishing Packaging Maintenance Stores 50% 35% Quality control 0% 15% 30% 35% 15% 15% 0% 0% 5% 0% Maintenance Stores Quality control 60% 20% 20% 0% 0% 0% (B2) Using the information provided in the tables above about the annual overheads and usage of each service by the production and other service departments, and if the overheads allocated to the three service departments are reallocated to the three production departments based on usage, reallocate the service overheads to determine the total overheads after reallocation for each of the three production departmentsStep by Step Solution
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