Eko Manufacturing Limited, located in Ikeja Industrial Estate, Lagos, manufactures a single standardized component known as 'Eko-Mix' used in the construction industry. The company is preparing its operational and cost budgets for the upcoming financial year. The management accountant has gathered the following data concerning Material X, a critical raw material used in producing 'Eko-Mix': - Annual demand for Material X: 24,000 units - Ordering cost per order: ₦12,500 - Holding cost per unit per annum: ₦60 - Lead time: 5 to 9 days (Average lead time = 7 days) - Daily usage: 60 to 100 units (Average daily usage = 80 units) In addition, the factory operates two production departments (Machining and Assembly) and one service department (Maintenance). For the upcoming year, the direct overhead costs budgeted are as follows: - Machining Department: ₦12,000,000 - Assembly Department: ₦8,000,000 - Maintenance Department: ₦4,000,000 The Maintenance department's costs are to be reapportioned to the production departments in the ratio of 60% to Machining and 40% to Assembly. Budgeted activity levels for the production departments are: - Machining Department: 50,000 machine hours and 20,000 direct labour hours - Assembly Department: 10,000 machine hours and 40,000 direct labour hours During the year, the actual results recorded for the Machining department were as follows: - Actual overhead incurred: ₦14,800,000 - Actual machine hours worked: 51,000 machine hours REQUIRED: (a) Calculate for Material X: (i) Economic Order Quantity (EOQ). (3 marks) (ii) Re-order Level. (2 marks) (iii) Maximum Inventory Level. (3 marks) (iv) Minimum Inventory Level (Safety Stock). (2 marks) (b) Re-apportion the Maintenance department's overheads to the production departments and calculate the most appropriate Overhead Absorption Rate (OAR) for both Machining and Assembly departments. Justify your choice of absorption base for each department. (6 marks) (c) Calculate the under- or over-absorption of overheads for the Machining department and state TWO reasons why under-absorption of overheads may occur in a manufacturing firm. (4 marks) (Total: 20 marks)