Question 3 Blue Ltd a manufacturing business with three production departments and one service department and has budgeted costs by department as follows: Dept Dept2 Depr3 Stores 320 480 200 Direct labour (000) 240 280 240 Indirect labour (000) 320 Production Requisition notes (000's) 120 160 40 Indirect materials (000) 30,000 30,000 20,000 10,000 Area occupied (sqm) 20 70 10 Use of external maintenance (%) 40 The following additional information is available: Total external maintenance costs will be 25,000 Components are held in stores until they are needed by the production departments, who obtain such on presentation of an authorised requisition note to the store staff. All direct labour is paid 5 per hour. Dept 3 has machine intensive production with 80,000 machine hours. Other costs for the coming year comprise: 000s Heating & lighting utilities 160 Rent 300 Property insurance 10 Required: (a) Allocate and apportion overheads to the three Production Departments: (a) Deduce appropriate overhead absorption rates for each department (b) ) Green Ltd have been asked to quote for the following job. Direct labour hours: Dept.1 Dept.2 Dept.3 10 hours 4 hours 2 hours Machine hours Dept 3 Direct materials: Dept.1 Dept.2 Dept.3 Calculate the manufacturing cost of this job. 4hours 120 18 8