QUESTION 1 (20 Marks) REQUIRED 1.1 Prepare the overhead allocation statement (using traditional costing). (14 marks) 1.2 Calculate the allocation rate (expressed to the nearest cent) for each of the production centres, based on machine hours for Machine centres A and B and direct labour hours for Assembly. (3 marks) 1.3 Calculate the overheads applied to each batch of the product. (3 marks) INFORMATION Perth Limited has three production centres (Machine Centre A, Machine Centre B and an Assembly Centre) and two service centres (Materials Procurement and General Manufacturing Support). The annual overhead costs are as follows: Costs R Indirect materials: Machine Centre A 300 000 Machine Centre B 483 000 Assembly 63 000 Materials Procurement 0 General Manufacturing Support 6 000 Indirect labour: Machine Centre A 600 000 Machine Centre B 600 000 Assembly 900 000 Materials Procurement 660 000 General Manufacturing Support 888 000 Heating and lighting 300 000 Property tax 600 000 Insurance of machinery 90 000 Depreciation of machinery 900 000 Insurance of buildings 150 000 Salaries of works management 480 000 The following information is also provided: Carrying value of machinery Area occupied (m2 ) Number of employees Direct labour hours Machine hours Machine Centre A R4 500 000 6 000 180 600 000 1 200 000 Machine Centre B R2 700 000 3 000 120 600 000 600 000 Assembly R720 000 9 000 180 1 200 000 0 Materials Procurement R540 000 9 000 60 0 0 General Manufacturing Support R540 000 3 000 60 0 0 R9 000 000 30 000 600 2 400 000 1 800 000 Total materials issues (both direct and indirect) to the production centres are as follows: Machine Centre A R2 400 000 Machine Centre B R1 800 000 Assembly R600 000 R4 800 000 Secondary allocation: The value of materials issued is used as a basis for the Materials Procurement cost centre. Direct labour hours is then used as the basis for the General Manufacturing Support cost centre. The product is produced in batches of 100. Each unit spends 5 hours in the Machine Centre A, 10 hours in Machine Centre B and 10 hours in the Assembly Centre