Ndola Batteries Ltd$,$ was recently established after so many government pronouncements on

the introduction of electrical vehicles. A govemment official was quoted as saying that al$]$

public service departments will be required to procure the electrical vehicles starting next year.

NBL commenced operations jmmediately after sourcing finance from a bank. It will produce

both the batteries and car charging accessories

The company has two production departments, Mixing and Assembly, and two service

departments, Stores and Maintenance. NBL has adopted absorption costing system. You are

the accountant at NBL$,$ and the cost department has collated the following information for

November $2023$ :

Additional budgeted information:

Required:

$($a$)$ Explain the three stages of overheads absorption$.$

$($b$)$ Using the step$-$down method overhead reapportionment, detemine the overhead

absorption rates for the production departments

$($c$)$ Calculate the blanket overhead absorption rate

Budgeted information for the car charging accessorjes is as follows:

November $2023$

Selling price per unit

Fixed production overheads per unit K$300$

NBL uses an overhead absorption rate for fixed production overheads and is based on noma$]$

capacity of $1,400$ units per month. The closing inventory for October $2023$ was $100$ units.

The following is the actual perfomance for month of November $2023.$Ndola Batteries Ltd$,$ was recently established after so many government pronouncements on the introduction of electrical vehicles. A government official was quoted as saying that all public service departments will be required to procure the electrical vehicles starting next year. NBL commenced operations immediately after sourcing finance from a bank. It will produce both the batteries and car charging accessories. The company has two production departments $,$ Mixing and Assembly, and two service departments, Stores and Maintenance. NBL has adopted absorption costing system. You are the accountant at NBL$,$ and the cost department has collated the following information for November $2023$: Total Mixing Assembly Stores Maintenance Direct costs: K$1,000,000$ K$400,000$ K$320,000$ K$100,000$ K$180,000$ Indirect costs: Indirect materials K$1,000,000$ Rent K$750,000$ Electricity K$500,000$ Machine depreciation K$250,000$ Indirect labour K$826,000$ Additional budgeted information: Total Mixing Assembly Stores Maintenance Number of Stores requisitions $10,0003,5004,0001,0001,500$ Number of staff $3191516$ Area square metres $2,0005001,000250250$ Machine value $($K$)500,000225,000175,00045,00055,000$ Indirect labour hours $24060404892$ Kilo watt hours consumed $4131382252525$ Direct labour hours $349159190--$ Maintenance hours $(\%)3070--$ Required: $($a$)$ Explain the three stages of overheads absorption$.(6$ marks$)($b$)$ Using the step$-$down method overhead reapportionment, determine the overhead absorption rates for the production departments. $(16$ marks$)($c$)$ Calculate the blanket overhead absorption rate. $(4$ marks