MWM Limited manufactures many different products which pass through two

production cost centres (P1 and P2). There are also two service cost centres (S1 and S2)

in the factory. The following information has been extracted from the budget for the

coming year:

P1 P2 S1 S2

Allocated and

apportioned

production

overheads

RM477,550 RM404,250 RM132,000 RM96,000

Number of

employees

30 65 10 15

Total machine

hours

68,000 11,400

Total direct

labor hours

4,000 14,000

Service cost centre S1 costs are reapportioned to S2, P1 and P2 based on the number of

employees. Service cost centre S2 only does work for P1 and P2 and its costs are

reapportioned to these centres in the ratio 5:3 respectively.

Required (Round up your answers: No decimal)

a) Reapportion service department overhead costs to production departments.

b) Calculate the machine hour absorption rate for cost centre P1 and the direct labor

hour absorption rate for cost centre P2.