QUESTION The Tree Tops Hotel is developing a cost accounting system. Initially it has been decided to create four cost centres: Residential and Catering deal directly with consumers, while Housekeeping and Maintenance are internal service cost centres. The following overhead details have been estimated for the next period: Residential Catering sekeeping Maintenance Total K Consumable materials 14,000 23,000 27,000 9,000 73,000 46,500 Staff costs 16,500 13,000 11,500 5,500 Rent and rates 37,500 Contents insurance 14,000 Heating and lighting 18,500 Depreciation on equipment 37,500 Total 227,000 The following information is also available: Residential Catering Hsekeeping Maintenance Total 1,350 600 5,000 Floor area (m) 2,750 Value of equipment K350,000 No. of employees 20 K250,000 20 K750,000 300 K75,000 5 K75,000 15 In the period it is estimated that there will be 2,800 guest-nights and 16,000 meals will be served. Housekeeping works 70% for residential and 30% for catering, and maintenance works 20% for housekeeping, 30% for catering and 50% for residential. Required: (a) Prepare an overhead statement showing clearly allocations and apportionments to each cost centre. (10 Marks) (b) Calculate appropriate overhead absorption rates for residential and catering, (4 Marks) (c) Calculate the under-/over-absorption of overheads if actual results were as follows: Residential: 3,050 guest-nights with overheads of K144,600 Catering: 15.250 meals with overheads of K89,250 (6 Marks)