ABC Limited is preparing its departmental budgets and product cost estimates for the year ending 31 December 20X1. The company has three manufacturing departments - Machining, Assembly and Finishing - along with a production maintenance department.

The following costs and related data have been estimated for the year to December 31, 20X1:

costs	machining	Assembly	Refinement	Maintenance	Total
direct wages	60	32	72	30	194
indirect wages	10	6	8	-	24
Direct materials	80	10	4	-	94
indirect materials	15	4	8	20	47
Force	-	-	-	-	102
light and heat	-	-	-	-	10
Depreciation	-	-	-	-	7
rent and fees	-	-	-	-	25
Personal	-	-	-	-	63
Other data:
Direct labor hours	12 000	8 000	15 000	6 000	42 000
machine hours	40 000	5 000	6 000	-	51 000
Employees	6	4	8	3	21
Constructed area (m 2 )	1 000	400	300	300	2 000
Net book value of fixed assets	2 000	8 000	3 000	4 000	35 000

The maintenance department is expected to spend 60% of their time working for the machining department, with the rest of their time split equally between assembly and finishing.

1. Prepare an overhead cost analysis sheet for ABC Limited for the year ending 31 December 20X1.

2. Calculate appropriate overhead absorption rates for the machining, assembly, and finishing departments.

3. Briefly discuss why it is necessary to reassign the service department.

4. Prepare a cost estimate, based on the following data, for a product to be manufactured in January 20X1:

	machining	Assembly	Refinement
Direct Materials (£)	2500	400	250
Direct labor hours	800	350	140
machine hours	1400	100	80