QUESTION 2 Nigerian Breweries Supply Co. Limited (NBSC), a subsidiary of a large conglomerate in Abuja, manufactures industrial cleaning agents for commercial clients. The company uses an absorption costing system and absorbs production overheads on the basis of machine hours. The following budgeted and actual data relate to the quarter ended 30 September 2024: Budgeted Data: - Production overhead: N18,000,000 - Machine hours: 60,000 hours - Units of production: 30,000 units Actual Data: - Production overhead incurred: N19,500,000 - Machine hours worked: 57,000 hours - Units actually produced: 28,500 units Additional Information: NBSC's management accountant is preparing a report for the Board and has been asked to explain the concept of overhead absorption and justify the choice of machine hours as the absorption base for the company's highly automated production process. Required: (a) Calculate the budgeted overhead absorption rate (OAR) for the quarter. (3 marks) (b) Calculate: (i) The overhead absorbed during the quarter (ii) The overhead over/under-absorbed and state clearly whether it is over or under-absorbed (6 marks) (c) Analyse the total over/under-absorption into: (i) Expenditure Variance (ii) Volume Variance Clearly state whether each variance is favourable or adverse. (8 marks) (d) Advise the management accountant on THREE reasons why machine hours is an appropriate overhead absorption base for NBSC's automated production process. (3 marks) (Total: 20 Marks)