QUESTION $3$

HMS limited has commenced the preparation of its fixed production overhead cost budget

for year $2$ and has identified the following costs:

K$000$

Machining $600$

Assembly $250$

Finishing $100$

Stores $80$

The stores and maintenance departments are production service departments. An

analysis of services they provide indicates that their costs should be apportioned as

follows:

Machining Assembly Finishing Stores Maintenance

Stores $40\%30\%20\%-10\%$

Maintenance $55\%20\%20\%5\%-$

You are required to determine the production costs, after apportioning the service

department costs $($to the nearest K$500).(20$ marks