The Red Carpet is developing a cost accounting system. Initially the hotel decided to create four cost centres: Residential and Catering deal directly with customers while Housekeeping and Maintenance are intemal service cost centres. RM RM Consumable materials - Residential - Catering - House-keeping - Maintenance 14,000 23,000 27,000 9,000 73,000 Staff costs - Residential - Catering - House-keeping - Maintenance 16,500 13,000 11,500 5,500 46.500 Rent and rates 37,500 Hotel contents insurance Heating and lighting Depreciation on equipment etc TOTAL 14,000 18,500 37.500 227.000 Depreciation on equipment etc TAL 37,500 227,000 The following particulars are available: Particulars Residential Catering 1,350 Area occupied (sq. metres) Number of personnel Book value of equipment House-keeping Maintenance 600 15 RM75,000 2,750 300 5 20 20 RM 350,000 RM250,000 RM75,000 Red Carpet 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, (2 marks) (e) Discuss TWO (2) unfavourable impacts that may arise if Red Carpet uses inappropriate bases in apportioning its overhead to the departments. (5 marks) (d) Discuss TWO (2) importance of overhead allocation for Red Carpet. Please remember to relate your answers to the business nature of the hotel. The Red Carpet is developing a cost accounting system. Initially the hotel decided to create four cost centres: Residential and Catering deal directly with customers while Housekeeping and Maintenance are intemal service cost centres. RM RM Consumable materials - Residential - Catering - House-keeping - Maintenance 14,000 23,000 27,000 9,000 73,000 Staff costs - Residential - Catering - House-keeping - Maintenance 16,500 13,000 11,500 5,500 46.500 Rent and rates 37,500 Hotel contents insurance Heating and lighting Depreciation on equipment etc TOTAL 14,000 18,500 37.500 227.000 Depreciation on equipment etc TAL 37,500 227,000 The following particulars are available: Particulars Residential Catering 1,350 Area occupied (sq. metres) Number of personnel Book value of equipment House-keeping Maintenance 600 15 RM75,000 2,750 300 5 20 20 RM 350,000 RM250,000 RM75,000 Red Carpet 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, (2 marks) (e) Discuss TWO (2) unfavourable impacts that may arise if Red Carpet uses inappropriate bases in apportioning its overhead to the departments. (5 marks) (d) Discuss TWO (2) importance of overhead allocation for Red Carpet. Please remember to relate your answers to the business nature of the hotel.