Overhead Costing

King and Brothers is a manufacturing firm with five (5) departments. A, B, and C are production departments, while X and Y are service departments. The following data have been availed.

	Producing departments			Service department
	A	B	C	X	Y
Direct wages 000 shs	70,000	60,000	50,000	10,000	10,000
Direct materials 000 shs	30,000	25,000	20,000	15,000	10,000
Employees No.	400	300	300	100	100
Electricity kwh	8,000	6,000	6,000	2,000	3,000
Light points No.	10	15	15	5	5
Assets values 000 shs	50,000	30,000	20,000	10,000	10,000
Area occupied SQ.YDs	800	600	600	200	200

The overheads were as under;
Particulars	Shs (000)
Labour welfare	30,000
Depreciation	60,000
Heating	12,000
Rent	6,000
Stores overhead	4,000
Motive power	15,000
Electric lighting	2,000

Required

Using a primary overhead analysis sheet, show how the overheads in King and Brothers can be apportioned between the five departments sighting relevant bases for the apportionment,

For each allocation base you have selected, explain reasons suggesting why you have preferred such an allocation base?

Explain how predetermined overhead absorption rates can aid the costing of products and services in King and Brothers.