Deccan Manufacturing Ltd. have three departments which are regarded as production departments. Service departments, costs are distributed to these production departments using the Step Ladder Method of distribution. Estimates of factory overhead costs to be incurred by each department in the forthcoming year are as follows. Data required for distribution is also shown against each department:

The overhead costs of the four service departments are distributed in the same order, viz., P, Q, R, and S respectively on the following basis:

(a). Prepare a schedule showing the distribution of overhead costs of the four service departments to the three production departments;

(b). Calculate the overhead recovery rate per direct labour hour for each of the three production departments.  

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Department Production: X Y Z Service: P Q R S Factory overhead Rs. 1,93,000 64,000 83,000 45,000 75,000 1,05,000 30,000 Direct labour hours 4,000 3,000 4,000 1,000 5,000 6,000 3,000 No. of employees 100 125 85 10 50 40 50 Area in sq. m. 3,000 1,500 1,500 500 1,500 1,000 1,000