Past Paper $2023$ ZB Q$20\backslash$& Past Paper $2022$ ZB Q$20$

$20.$ Adams Ltd is a manufacturing company which uses two production departments $($machining and assembly$)$ to make its products. It also has two service departments $($canteen and machinery maintenance$).$ Shown below are next year's budgeted manufacturing overhead costs and certain other additional data:

Additional data:

Required:

$($a$)$ Allocate or apportion each of the manufacturing overheads to the four departments showing clearly the basis used for each manufacturing overhead. Show also the total allocation$/$apportionment for each department.

$(3$ marks$)$

$($b$)$ Adams Ltd apportions service department costs to production departments using a method that fully recognises any work done by one service centre for another. What are the total overheads for the machining and assembly departments after the re$-$apportionment of all service department overheads?

$(4$ marks$)$

$($c$)$ Calculate an overhead absorption rate for the two production departments based on direct labour hours. Show your answer to decimal places.

$(3$ marks$)$

$($d$)$ Calculate the cost of product ORANGE which had direct labour costs of $\backslash (1,962\backslash ),$ direct material costs of $\backslash (2,082\backslash )$ and used the following labour hours in each of the $2$ departments.

$(3$ marks$)$

$($e$)$ Discuss the reasons why managers would want to know the full cost of their products.