Cost and management

Question 1
a. Calculate five different overhead absorption rates for cost centre 17 based on the following budgeted data: [5]
Labour hours per period 1400
Total direct wages for period $3600
Total direct materials for period $7500
Total machine hours for period 2850
Total units produced for period 535
Total overheads for period $12900

b. A cost unit has been produced in cost centre 17 and the following details recorded:
Direct materials used $16.50
Direct wages $17.50
Direct labour hours 5.5
Machine hours 8.5
Calculate the costs of this unit using each of the absorption bases calculated in part a. [5]

c. What basis of overhead absorption would you recommend if you are informed that cost centre 17 comprises a number of numerically controlled machine tools with semi-skilled operators and that over a half of the cost centre’s overheads relate to machine depreciation? Give reasons. [5]