ZidronEnterpriseshas3productioncentres(MachinecentreA,MachinecentreBandanAssemblycentre).Italsohastwo(2)servicecentres(MaterialsprocurementandGeneralmanufacturingsupport).

Thefollowinginformationontheannualoverheadcostsisavailable:

	R
Indirectmaterials: MachinecentreA	250000
MachinecentreB	402500
Assembly	52500
Materialsprocurement	0
Generalmanufacturingsupport	5000
Indirectlabour: MachinecentreA	500000
MachinecentreB	500000
Assembly	750000
Materialsprocurement	550000
Generalmanufacturingsupport	740000
Heatingandlighting	250000
Propertytax	500000
Insuranceofmachinery	75000
Depreciationofmachinery	750000
Insuranceofbuildings	125000
Salariesofworksmanagement	400000

	Carryingvalueofmachinery	Areaoccupied(m2)	Numberofemployees	Directlabourhours	Machinehours
MachinecentreA	R4000000	5000	150	500000	1000000
MachinecentreB	2500000	2500	100	500000	500000
Assembly	500000	7500	150	1000000
Stores	250000	7500	50
Maintenance	250000	2500	50
	R7500000	25000	500

Totalmaterialsissues(bothdirectandindirect)totheproductioncentresareasfollows:

MachinecentreA	R2000000
MachinecentreB	1500000
Assembly	500000
R4000000

Secondaryallocation:Thevalueofmaterialsissuedisusedasabasisforthematerialsprocurementcostcentre.Thedirectlabourhoursisusedasthebasisforthegeneralmanufacturingsupportcostcentre.

ProductXisproducedinbatchesof100.Eachunitspends5hoursintheMachinecentreA,10hoursinMachinecentreBand10hoursintheAssemblycentre.

Required:

1. Usingthetraditionalcostingapproach,prepareanoverheadallocationstatement. (8)

1. Calculatetheallocationrateforeachoftheproductioncentres,basedonmachinehoursforMachinecentresAandBanddirectlabourhoursforassembly. (3)

1. Usingtheallocationratescalculatedin3.2,calculatetheoverheadsappliedtoeachbatchofProductX. (4)