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Question 2 (26 marks) Monica Enterprises is preparing its overhead budgets for a forthcoming period. The company has three production departments A, B and C, and two service departments X and Y. The following figures have been produced: Overhead cost N$ Machine hours 40 ooo 15 ooo 42 ooo 12 ooo 45 ooo 13000 40 ooo 42 ooo Overhead is absorbed on a machine hour basis. It has been estimated that service department usage is as follows: Page 16 of 18 FACULTY OF COMMERCE, MANAGEMENT AND LAW OLD CURRICULUM MODULES De artment X De artment Y Required Define: 100/0 Marks Sub- Total total 2.1 2.2 2.3 2.4 Total i Overhead allocation ii Overhead a ortionment. Prepare a schedule of the overhead costs to be charged to departments A, B and C, using the repeated distribution method to apportion the service department costs to the production departments (work to the nearest N$). Calculate the overhead absorption rates for the period for departments A, B and C work to the nearest N$ . State why hourly rates are generally accepted to be the most appropriate method of overhead absorption, and comrnent upon other methods of absorption that may be used. 2 2 10 6 26 2 4 14 20 26