Question 1 O'Reilly's Manufacturing Ltd is preparing its budgets and estimates for product costs for the year ahead. The company has three manufacturing departments, machining, assembly and finishing and two service departments, stores and maintenance at its Cork base. The following estimated costs and other information relate to the year ended 30 September 2020. Expense Direct Material Machining Assembly Finishing Stores Maintenance Total e 18,000 170,000 48,000 52,000 35,000 17,000 Indirect Labour 34,000 16,000 5,700 4,500 Light & Heat Depreciation of Buildings Rent and Rates Equipment insurance Machine related costs Canteen Services 6,000 66,200 87,500 82,000 170,000 44,000 68,000 54,500 Other information Direct labour hours 8,000 10,500 12,200 Machine hours 25,000 2,000 Employees 10 20 Floor area (square metres) 600 400 NBV of Equipment 25,000 KW Hours 1,300 45,000 2,100 800 300 4,000 10 5 300 100 20,000 8,000 30,700 31,000 5 50 100 1,500 12,000 110,000 500 5,000 Notes: 1. The stores department provides 70% of its services to the machining department, with the remaining services being split equally between the assembly and finishing departments. 2. The maintenance department is expected to spend 40% of its time working for the machining department, 40% of its time working for the assembly department and the remaining time working for the finishing department. Required: (a) Prepare an overhead analysis sheet for O' Reilly Manufacturing Limited for the year ended 30 September 2020. (22 Marks) (b) Calculate appropriate absorption rates for the machining, assembly and finishing departments. (6 Marks) (e) If actual machine hours for the Machinery department were 32,000 hours and actual machine related overhead was 328,000. i. ii. Calculate the under/over absorption of the machinery department and State the effect of this under/absorption on profit. (5% Marks) (Total: 33% Marks) 6