Leith Brothers is a company that manufactures scientific equipment. The following information from the accounts has been provided by Leith Brothers accountant.

Indirect costs

Cost item	Cost for year to 31st October, 200X
Indirect materials	180,000
Indirect labour	250,000
Rent	260,000
Insurance	110,000
Depreciation	130,000
Total	930,000

Information about each department (cost centre)

	Production Departments		Service Department
	Machining	Painting	Quality Control
Direct material cost	3,000,000	800,000	not applicable
No of employees	30	20	10
Floor area	20,000	8,000	3,000
Book value of machinery	3,000,000	80,000	120,000
Direct labour hours	28,000	40,000	not applicable

NB: the Quality Control department tests samples of the work done by individual employees in the two production departments.

Required

1. Apportion indirect/overhead costs over the three departments using a suitable method for each item of cost.

(15 marks)

2. Apportion the costs of the service department to production departments

(4 marks)

3. Calculate an overhead cost rate, based on direct labour hours, for each production department.

(3 marks)

4. Determine how much overhead cost should be applied to an item of scientific equipment that receives 5 hours of direct labour in Machining and 2 hours of direct labour in Painting.