ABC Limited is preparing its departmental budgets and product cost estimates for the year ending 31 December 20X1. The company has three manufacturing departments – Machining, Assembly and Finishing – along with a production maintenance department. The following costs and related data have been estimated for the year to December 31, 20X1: costs machining Assembly Refinement Maintenance Total direct wages

Sep 8, 2023

ABC Limited is preparing its departmental budgets and product cost estimates for the year ending 31 December 20X1. The company has three manufacturing departments – Machining, Assembly and Finishing – along with a production maintenance department.

The following costs and related data have been estimated for the year to December 31, 20X1:

Don't use plagiarized sources. Get Your Custom Essay on
ABC Limited is preparing its departmental budgets and product cost estimates for the year ending 31 December 20X1. The company has three manufacturing departments – Machining, Assembly and Finishing – along with a production maintenance department. The following costs and related data have been estimated for the year to December 31, 20X1: costs machining Assembly Refinement Maintenance Total direct wages
Just from $13/Page
Order Essay

costs

machining

Assembly

Refinement

Maintenance

Total

direct wages

60

32

72

30

194

indirect wages

10

6

8

24

Direct materials

80

10

4

94

indirect materials

15

4

8

20

47

Force

102

light and heat

10

Depreciation

7

rent and fees

25

Personal

63

Other data:

Direct labor hours

12 000

8 000

15 000

6 000

42 000

machine hours

40 000

5 000

6 000

51 000

Employees

6

4

8

3

21

Constructed area (m 2 )

1 000

400

300

300

2 000

Net book value of fixed assets

2 000

8 000

3 000

4 000

35 000

The maintenance department is expected to spend 60% of their time working for the machining department, with the rest of their time split equally between assembly and finishing.

1. Prepare an overhead cost analysis sheet for ABC Limited for the year ending 31 December 20X1.

2. Calculate appropriate overhead absorption rates for the machining, assembly, and finishing departments.

3. Briefly discuss why it is necessary to reassign the service department.

4. Prepare a cost estimate, based on the following data, for a product to be manufactured in January 20X1:

machining

Assembly

Refinement

Direct Materials (£)

2500

400

250

Direct labor hours

800

350

140

machine hours

1400

100

80

Recent Posts