Kanga Ltd has three production departments and two service departments. The following is their budgeted factory overheads for the year ended 30 September 2000:

	Shs.	Shs.
Production departments
A	240,000
B	180,000
C	220,000	640,000
Service departments X	86,000
Y	44,000	130,000
		770,000

The service department costs are to be re-apportioned as per the following percentages:

A B C X Y

X 20 30 35 - 15

Y 30 30 30 10 -

Required:

Re-apportion the service department costs to the production departments using the simultaneous equation method. (10 marks)

You are informed that the overheads are absorbed on the basis of the direct labour hours and the budgeted direct labour hours for the departments as given below:

Department A 1000 hours

B 2500 hours

C 4000 hours

Required:

Determine the overhead absorption rates per hour for the three production departments. (10 marks