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