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KLM Ltd manufactures a single product A.It has two production departments (cost centers) namely Department A and Department B. Information about the overheads allocated to

KLM Ltd manufactures a single product A.It has two production departments (cost centers) namely Department A and Department B. Information about the overheads allocated to these two departments (A&B) is given below:

Information Department A Department B

Total Manufacturing overheads $ 71,327 $ 50,756

Total Machine hours (estimated) 27,200 800

Total Direct Labour Hours (estimated) 6,800 18,000

KLM Ltd executes a job no. 847.The cost and output details of Job No.847 are given below:

Information Costs/hours details for Job No. 847

Direct Materials $ 487

Direct Labour $ 317

Number of machine hours used in Department A for Job no. 847 195 hours

Direct labour hours used in Department B for Job No. 847 102 hours

Production Department (A & B) overheads allocation to Job No. 847 will be as follows:

(a) Production Department A overheads will be allocated based on machine hours

(b) Production Department B overheads will be allocated using direct labour hours

Required

(1) Calculate overhead absorption rate for Production Department A and Production Department B allocation bases given above

(2) Ascertain the total cost of Job No. 847

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