Starlink plc (Starlink) is a service company. Its services are provided from two service departments ( Service 1 and Service 2) which are supported by two other departments (Canteen and Administration). Starlinks accountants has provided budgeted overheads for the next three months (April to June) as follows:

Rent and rate	$1,000,000
Electricity, gas, and water	$350,000
Supervisors salaries	$1,500,000
Fixtures depreciation	$1,400,000
Canteen costs	$120,000

Canteen takings for the next three months are budgeted at $20,000

The above overheads are to be allocated and apportioned to the four departments using the following information:

	Service 1	Service 2	Canteen	Administration
Floor area	6,000 m2	8,000 m2	3,000 m2	3,000 m2
Fixtures costs	$240,000	$160,000	$100,000	$200,000
Number of employees	80	60	10	50

In the following three months (July to September), the initial allocation and apportionment of budgeted overheads have already been completed to the four departments, and now Starlinks accountant wishes to reapportion the canteen and administration overheads to the two service departments. She has provided the following information:

	Service 1	Service 2	Canteen	Administration
Total apportioned overhead ($)	1,480,000	1,300,000	550,000	1,200,000
Floor area (m2)	6,000	4,000	3,000	3,000
Fixture costs ($)	240,000	160,000	100,000	200,000
Number of employees	80	60	10	50

In the following three months (October to December), Service 2 department had budgeted overhead of $1,960,000 and a budgeted labor cost of $5,600,000; whereas Service 1 department had budgeted and actual overhead of $2,400,000 and budgeted labor hours of 10,000, although actual hours worked, were 10,688.

Required:

1. Allocate and apportion the overheads to the four departments for the period of three months from April to June.
2. Reapportion the Canteen and Administration overheads to Service 1 and Service 2, using the step-down method and starting with the largest cost, for the period of three months from July to September.
3. For the period of three months from October to December, calculate the budgeted overhead absorption rate as a percentage of labour cost in Service 2 department and calculate the under or over absorption of overheads in Service 1 department.