Problem 93 The indirect costs incurred by the business on behalf of all departments taken together are given below: Cost item Indirect materials Total cost this month, E 36,000 Indirect labour 40,000 Rent 1,000 Insurance 1,600 Depreciation Total 2,000 80,600 The costs must be apportioned (shared) over the departments because there is insufficient information to permit allocation of costs as a whole. The following table sets out relevant information about each department which will be used in the process of determining an overhead cost rate: Assembly Finishing Maintenance Direct materials used for production 400,000 500,000 not applicable Number of employees Floor area 20 25 5 100 sqm 200sqm 100 sq m Value of machinery 30,000 50,000 20,000 Number of direct labour hours worked on 55,000 production 64,000 not applicable Required: Calculate the overhead cost allocated to the product. Suppose to produce the product you need to spend 2 hours in assembly department and 3 hours in finishing department.