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ASSIGNMENT TWO Sarajh Engineering Ltd is company in the manufacturing of various agricultural equipments. The following relates to the manufacturing department for the period: Budget data (K) 100,000 Actual Data (K) 150,000 Direct materials Direct labour cost 250,000 275,000 Production overhead 250,000 350,000 Direct labour hours 50,000 hours 55,000 hours Job MBD was one of the jobs worked on during the period. Direct material costing K7,000 and direct labour (800 hour) costing K4,000 were incurred Required: 6.1 Calculate the production overhead absorption rate predetermined for the period based on: (a) Percentage of direct material cost; (3 Marks) (b) Direct labour hours (3 Marks) 6.2 Calculate the production overhead cost to be charged to job MBD based on the rates calculated in answer to (6.1) (2 Marks) 6.3 Briefly define absorption costing (5 Marks) 6.4 Comment briefly on the relative merits of the two methods of overhead absorption used in (6.1) above (7 Marks)