Stores Dept 3,000 25,000 Maintenance Dept 2,000 15,000 Floor area (square metres) Value of plant & machinery (10) Number of stores requisitions Maintenance hours required Number of employees Machine hours Labour hours Cutting Shaping Dept Dept 18,000 12,000 300,000 50,000 1,000 500 2,700 2,000 34 60 12,000 2,000 9,000 15,000 300 2 Required: (a) Prepare an overhead analysis sheet based on the above information, clearly state the basis used for any apportionments. (12 marks) (b) Re-apportion the service department costs and calculate the most appropriate overhead rate for each department (rate should be calculated to two decimal places (5 marks) (c) During the year ended 31 December 2019 the following hours were actually worked and the following actual incurred: Department Labour hours Machine hours Cutting Shaping 8,000 16,000 14,000 3,000 Overhead costs Incurred K531,500 K405,500 Calculate the over/under absorbed overhead for each of the two department for the year ended 31 December 2019. (3 marks) (Total: 20 marks) 2 QUESTION TWO An audit senior at your place has requested you to undertake a review of the dient's inventory system by determining the critical inventory levels, economic order quantity, cost of issues and valuation of closing inventory. The client file contains the following schedules in relation to inventory: Minimum Usage 500 units per working week Maximum Usage 3000 units per working week Average Usage 2 500 units per week Lead time 10 - 20 days Ordering costs K360 per order Purchase cost K5 per unit Holding cost 8% of purchase costs per year Required (a) Calculate the following: (1) Inventory Re-order level (W) Minimum inventory level (1) Economic order quantity (iv) Maximum inventory levels [2 marks] [2 marks] [2 marks] [2 marks]