Show me the steps to solve An organization has budgeted for the following production overheads for its production and service cost centres for the coming year. Cost centre $"$Sh$\mathrm{.}000"$ Machining $180000$ Assembly $160000$ Paint shop $130000$ Engineering shop $84000$ Stores $52000$ Canteen $75000.$

The product passes through the machining, assembly and paint shop cost centres and the following data relates to the cost centre

Machining Assembly

Paint Shop

Eng shop

Stores

No$.$ of employces $8151393024$

Eng Shop service$)180001200010000$

Stores $($orders$)1801359045.$

The following budgeted data relates to the production cost centres: Machining Assembly Paint shop Machine hours $920081006600$

Lab hours $8300112509000$ Lab cost $($in Sh$000)400008800045000$

Required: Apportion the production overhead costs of the service cost centres to the production cost centres and determine predetermined overhead absorption rates for the $3$ production cost centres on the following basis: Machining $-$Machine bours Assembly $--$ Labour hours. Paint shop $-$ Labour costs. $(10$ marks$)$

$($b$)$ Explain why overheads need to be absorbed upon predetermined bases such as the above. Consider whether these bases for absorption are appropriate in the light of changing technology, suggesting an alternative basis that you consider appropriate. $(5$ marks$)$

c$)$ Explain the differences between traditional absorption costing and activity based costing $(5$ marks$)$