You have been asked to suggest a method of deducing the full cost of various production orders of Cheryl Ltd. This method will be used as a basis for setting prices. The production orders vary greatly in size and nature from one to the next. The following information has been taken from the budget for the forthcoming financial year: Direct labour hours 70,000 hours Machine hours 75,000 hours Direct material 16,000 kg Manufacturing costs: Power 40,000 Direct materials 200,000 Machine maintenance and repairs 38,000 Factory heat and light 4,000 Lubricants and cleaning materials 6,000 Direct labour 700,000 Depreciation: factory buildings 130,000 machinery 402,000 Indirect labour 100,000 1,620,000 The business is not departmentalised for accounting purposes. All direct labour is paid the same hourly rate. Required: (a) Calculate two feasible overhead rates (labour hours and machine hours) for the year. (5 marks) (b) Prepare full costings for Order No 101 using each of the rates calculated in (a) (that is, two separate costings). The cost sheet for Order No 101 shows the following: Direct materials 400kg Direct labour hours 1,200 hours Machine hours 800 hours (7 marks) (c) State briefly which of the two bases of overheads you prefer and why. How might you improve on the two possible costs that you derived in (b) by taking a slightly different approach? (