The tree tops hotel is developing a cost account system. Initially it has been decided to create four cost centres. Residential and Catering deal directly with consumers, while Housekeeping and Maintenance are internal service cost centres.

The following overhead details have been estimated for the next period

Consumable materials: Residential-14,000, Catering-23,000, Housekeeping-27,000, Maintenance-9,000,Total=73,000

Staff costs: Residential-16,500, Catering-13,000, Housekeeping 11,500, Maintenance-5,500, Total=46,500

Rent and rates:Total=37,500

Contents insurance: Total=14,000

Heating and lighting:Total=18,500

Depreciation on equipment:Total=37,000

Total:227,000

The following information is also available

Floor area(square metres): Residential-2,750, Catering-1,350, Housekeeping-600, Maintenance-300, Total=5,000

Value of equipment: Residential-350,000, Catering-250,000, Housekeeping-75,000, Maintenance-75,000, Total=750,000

No. Of employees: Residential-20, Catering-20, Housekeeping-15, Maintenance-5,Total=60

In the period it is estimated that there will be 2,800 guest-nights and 16,000 meals will be served.house keeping works 70% for residential and 30% for catering, and maintenance works 20% for housekeeping,30% for catering and 50% for residential.

Required:

(a) Prepare an overhead statement showing clearly allocations and apportionments io each cost centre

(b) Calculate appropriate overhead absorption rates for residential and catering

(c) Calculate the under-/over- absorption of overheads if actual results were as follows:

Residential:3,050 guest-nights with overheads of 144,600

Catering:15,250 meals will overheads of 89,250