PLEASE HELP ME SOLVE THIS PROBLEM. I NEED TO STUDY FOR MY EXAMS!! URGENT!!?

Posted on 2014-04-14 10:14:00 in Economics by NATASA

Omega Ltd has recently set up a small business which manufactures three different types of products. Omega has employed you, as an undergraduate Business Studies student on internship to assist the Finance Manager in determining the cost of each product in order to calculate the mark up on each one of the products.

The following information provides details of the costs, volume and transaction cost drivers for a period in respect of Omega Ltd: Products

A B C Total

Sales and production (units) 90,000 30,000 15,000 135,000

Raw materials usage (units) 20 14 21 2,535,000

Direct materials cost (£) 60 80 30 8,250,000

Direct labor hours 5 6 3 675,000

Machine hours 10 6 15 1,305,000

Direct labor cost (£) 40 48 24 5,400,000

Number of production runs 10 20 100 130

Number of deliveries 36 14 100 150

Number of receipts 100 140 1,400 1,640

Number of production orders 90 50 120 260

Overhead costs £

Set up 150,000





Machines 2,000,000

Receiving 1,800,000

Packing 1,300,000

Engineering 1,500,000

Total 6,750,000



(a) Calculate the total costs for each product if all overhead costs are absorbed on a labor hour basis.

(b) Calculate the total costs for each product, using activity based costing

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