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Absorption costing - PLEASE HELP ME :( :( :(

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TSR's new app is coming! Sign up here to try it first >> 17-10-2016
    • Thread Starter

    Hiya guys as you can see from the title.... I am desperate, I currently am a 1st year international business student at Portsmouth but I will be doing my second year abroad in Sweden if I pass all my units.... this includes... accounting which I am really struggling with as I had to take time off due to medical reasons

    Sooooo, I was wondering PLEASE can someone help me with this question? It would mean the world to me! (like seriously the world!!!!) Thanks for reading this far even if you cant help me

    Explainhow the organisation could establish individual product costs using traditionalabsorption costing techniques. You should explain the purpose and principles ofthe technique and demonstrate the technique by calculating the cost of oneGizmo from the data provided below:

    - The factory has two production costcentres (Forming and Finishing) and two service cost centres (Stores andMaintenance). Budgeted overheads for the coming period are as follows: Rent, rates, heat & light £90,000 Depreciation of Machinery £36,000 Canteen costs £60,000 Production Manager’s Salary £28,000 Storeman’s Salary £18,000 Maintenance Engineer’s salary £24,000 - Additional forecast data for the periodis as followsata Forming Finishing Stores MaintenanceNumber of employees 20 8 1 1 Floor Area (sq metres) 4,500 2,800 1,200 500 Machine Value £120,000 £50,000 £2,000 £8,000 Material requisitions 1,400 2,200 200 Maintenance hours 120 190 10 - All production workers are employed for38 hours a week, with five weeks holiday per year. Production workers in theforming department are paid £10 per hour and those in the finishing departmentare paid £12 per hour. - The raw material cost of one Gizmo is £28 andeach Gizmo takes 2 hours in the forming department and three hour in thefinishing department to complete.

    Thank you

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