Wonder Ltd. is company based in the industrial area that manufactures fishing hooks and fishing nets.  The company uses predetermined overhead rates in applying overheads to production orders.  In this respect it uses the cost of labour in applying overhead incurred in Department A while in Department B it uses machine hours utilized in the department.  The company made the following projection at the commencement of year 2000:


Department A
Sh.
Department B
Sh.

Direct materials
Direct labour
Production overhead


Machine hours
Direct labour hours
1,800,000
1,200,000
960,000
3,960,000

96,000
80,000
400,000
250,000
220,000
870,000

22,000
25,000


During the year, Job L10 consumed the following inputs:


Department A
Department B

Direct materials
Direct labour cost
Machine hours
Direct labour hours
Sh.11,000
Sh.9,600
768
640
Sh.2,500
Sh.2,000
176
2000


Required:
(a)What is the overhead application rate with respect to Department A and Department B?
(6 marks)
(b)What is the total cost of production of Job L10?(4 marks)
(c)At the end of the year 2000, the actual factory cost incurred amounted to Sh.944,000 in Department A and Sh.231,000 in Department B.Calculate the over applied or under overhead for each Department and for the entire factory.(5 marks)