Question 1 Delta is an electronic company manufacturing different types of products. They have appointed a new management accountant who has explained about Overheads. "Overhead is the cost incurred in the course of making a product, providing a service or running a department, but cannot be traced directly and in full to the product or service." He also explained that there are different methods to deal with overheads to get the more accurate cost of product, which is very important to deal with competition. Delta Company has Two production departments (A, and B and two service departments (Service 1 and Service 2). The information about the budgeted cost as given as below: Overhead cost Total (OMR) Rent and rates 12000 to 13000 (choose between Machine Insurance 5000 to 7000 ((choose between) Depreciation of machine 16000 Production supervisor's salary22000 Heating and lighting 6200 The company has new premises, and all the departments are housed in this premises. The additional details about the production and service department are given below: Base Department A Department Service Service 2 1600 12000 400 1000 Floor Area (Sq, meters 2000 Machine Value (OMR) 20000 Labour Hours 3000 Labour Rate per hour 3.80 KOMR Service 1 70% Service 2 30% T1000 XOOO 1600 3.50 4000 310001 4600 3.00 3.00 20 10 Required: a) Prepare a statement showing the overhead cost for each production department showing the basis of apportionment used. 4 Marks b) Reapportion the overheads using the direct method of reapportionment 2 Marks c) There are different ways to deal with the overhead, Absorption costing is a method of sharing overheads between different products on a fair basis. Discuss and Evaluate the Absorption costing procedure. 4 Marks