QUESTION 1 (20 Marks) 1.1 Use the information provided below to answer the following questions. The information given below relates to the forthcoming period for AWD manufacturers operation. There are four cost centres of which two are involved in production and two are service cost centres. Total Production dept A Production dept B Service dept: Canteen Service dept: Stores R R R R R Allocated costs 700220 213 280 299 280 84 370 103 290 Other costs: R Rent and rates 46 410 Building insurance 37 130 Electricity and gas 68 000 Plant depreciation 283 900 Plant insurance 85 170 1 220 830 Production dept A Production dept B Service dept: Canteen Service dept: Stores Area occupied (m2 ) 7 735 6 188 1 547 3 094 Plant at cost (R000) 18 450 8 520 - 1 420 No. of employees 600 300 30 70 Machine hours 54 400 1600 - - Direct labour hours 13 600 36 000 - - No. stores requisitions 54 800 6 800 - - Secondary allocation: Since the canteen serves all other departments, its costs should be apportioned first. REQUIRED 1.1.1 Prepare an overhead allocation statement showing the departmentalisation of the manufacturing overheads (Note: the primary and secondary allocations must be clearly indicated). (12 Marks) 1.1.2 Calculate a production overhead absorption rate for production departments A and B (machine hours are used as the absorption base for production department A and number of employees as the basis for production department B). (4 Marks) 1.2 The actual overhead incurred, the actual direct labour hours, and the actual machines hours used by production departments A and B are shown below: Production department A Production department B Actual results: Overhead incurred R704 830 R528 740 Direct labour hours 13 480 36 600 Machine hours 55 800 1 700 REQUIRED Calculate the under- or over-absorbed overhead in each of the departments using the information on the actual data provided and the production overhead absorption rates for production departments A and B, calculated in 1.1.2. (4 Marks)