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Sams Ltd is large organization situated in Ioha. It manufactures a unique type of concrete transport truck. Sams Ltd has two production departments (Assembly and Finishing) and two service departments (Canteen and technical department. Production departments focuses on making the concrete trucks and services departments provides service to production departments and also service departments. The budgeted fixed overheads relating to the departments for the next quarter are:

Overheads Total Assembly Finishing Maintenance Canteen

$ $ $ $ $

Indirect materials 50,155 17,500 20,000 7,580 5,075

Indirect labour 13,300 4,000 5,550 0 3,750

Rental costs 14,200

Electricity costs 50,000

Machine Re & Main37,500

165,155

The following information is also available:

Assembly Finishing Maintenance Canteen

Area occupied (square metres) 2,500 5,000 1,200 1,300

kilowatt hour (kWh) 6,875 11,250 4,925 1,950 Machine Value 112,500 87,500 27,500 22,500

Direct labour hours 6,500 3,500

Machine Hours 8,500 2,000 1,500

Number of Employees 50 75 25 20

Hours by technical team 950 1,550

Required a) Prepare a table showing the allocation, apportionment, and re-apportionment (use the stepdown method for reapportionment.) of the fixed overheads between the production departments, using the most appropriate basis.

b) Discuss the terms under and over recovery

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