Ouestion $12$ mar$$

The main distributer of natural juices uses two processes for its production process. The fruit juices pass through a distillery and a canning department. Both departments incur overheads; however, management wants to assess the total overheads absorbed in each department. The information below relates to the budgeted overheads for each department prepared by the cost controller:

For the period ended $30$ June $2020$ the actual overheads incurred amounted to $$100,000,000$ of which $60\%$ relates to distillery and the remainder to canning. The production manager also provided data for the period which indicates that total direct labour hours are $20\%$ more than expected. Meanwhile machine hours are $200,000$ and $1,400,000$ more than planned for distillery and canning respectively. The budgeted direct wages were the same as planned

Required:

$($a$)$ Outline the two main factors that may result in an under$/$over absorption of overheads at the entity.

$(4$ marks$)$

$($b$)$ Calculate the overhead absorption rates for both departments.

$(6$ marks$)$

$($c$)$ Calculate the under$/$over absorption of overheads for each department. $(6$ marks$)$

$($d$)$ Distinguish between overhead 'apportionment' and 'allocation'