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Essay example - Management accounting
Finance & Accounting
Pages 8 (2008 words)
(a) Calculate the total profit on each of Sober plc’s three types of product using each of the following methods to attribute overheads: (i) The existing method based upon labor hours; and (ii) Activity Based Costing. i) Volume Based Costing using Direct Labor Hours Overheads Overheads Cost Deliveries to retailers 4,800,000 Set-up costs 12,000,000 Purchase orders 7,200,000 Total Overhead Cost 24,000,000 Product Total Labor Hours Labor Hours per unit Labor Rate per unit Sunshine 200,000 100 1,000 Roadster 220,000 138 1,375 Fireball 80,000 200 2,000 Total DLH 500,000 Total Overhead Cost 24,000,000 Total DLH 500,000 Overhead Rate per DLH 48 Sunshine DLH Assigned 200,000 Overhead Rate 48 Tot…
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al Overhead Cost 9,600,000 No. Units 2,000 Overhead Rate per unit 4,800 Roadster DLH Assigned 220,000 Overhead Rate 48 Total Overhead Cost 10,560,000 No. Units 1,600 Overhead Rate per unit 6,600 Fireball DLH Assigned 80,000 Overhead Rate 48 Total Overhead Cost 3,840,000 No. ...
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