QUESTION 3 Kaduna Textile Mills Plc (KTM) is a publicly listed company that manufactures high-quality woven fabrics for both domestic and export markets. The company operates three production departments: Weaving, Dyeing, and Finishing. It also has two service departments: Maintenance and Administration. The following budgeted overhead costs and activity data are available for the year ending 31 December 2024: Overhead Costs (N'000): - Rent and Rates: 12,000 - Machinery Depreciation: 18,000 - Supervisory Salaries: 9,000 - Canteen Costs: 6,000 - Total: 45,000 Departmental Data: | Basis | Weaving | Dyeing | Finishing | Maintenance | Admin | |--------------------|---------|--------|-----------|-------------|--------| | Floor Area (sq m) | 3,000 | 2,000 | 1,500 | 1,000 | 500 | | Machine Value (N'm)| 40 | 30 | 20 | 5 | 5 | | No. of Employees | 50 | 40 | 30 | 10 | 20 | | Labour Hours | 20,000 | 15,000 | 10,000 | - | - | Service Department Reapportionment: - Maintenance costs are reapportioned to production departments in the ratio 4:3:3 (Weaving:Dyeing:Finishing) - Administration costs are reapportioned to production departments in the ratio 5:4:1 (Weaving:Dyeing:Finishing) - Service departments do not serve each other KTM absorbs production overheads in all three production departments using a direct labour hour basis. Required: (a) Using appropriate bases, apportion the four overhead costs across all five departments to produce a departmental overhead analysis. (10 marks) (b) Reapportion the service department costs to the three production departments using the ratios provided. (5 marks) (c) Calculate the overhead absorption rate (OAR) for each of the three production departments. (3 marks) (d) Briefly explain the meaning of 'blanket overhead absorption rate' and state ONE disadvantage of using a blanket rate for a multi-department company like KTM. (4 marks) (e) A job (Job No. KTM-114) passes through all three departments and uses the following direct labour hours: - Weaving: 8 hours - Dyeing: 5 hours - Finishing: 3 hours Calculate the total production overhead to be absorbed by Job KTM-114. (3 marks) (Total: 25 Marks)