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r easily, so overtime is
going through the roof”.
Davina then decides to talk to the marketing manager, who says—“We are facing fierce
competition for our main high volume lines and we just can’t match the low prices in the
marketplace. However, we have successfully increased our sales of the more specialised
tanks despite an increase in prices forced on us by manufacturing. So, we are meeting our
overall sales targets and as we encourage this trend towards the high margin specialist
product lines, our profits will rise. I don’t see any problem at present but there will be
many problems if manufacturing do not get control of their cost increases”
Davina starts to pull together the information and gets frustrated at the inconsistencies
“We are meeting our sales targets but production costs are rising because of the switch to
specialist products. However, as these are sold at a higher price, we should be improving
our profits. I really don’t understand why our profits are falling”
As Davina designed the costing system, she is reluctant to admit it is at fault and she
remembers clearly the opposition she had when she last recommended changes. She no
longer has her father to back her up so she decides to bring in a consultant (you, the
student) to help identify the problem and to make recommendations as to future action.
Davina supplies you with the following information.
Budgeted overhead costs per month: £
Machines 279,500
Set-up and engineering support 200,200
Materials handling 119,600
Total overheads 599,300
Direct labour 170,000
Total manufacturing cost excluding direct materials 769,300
Further details:
Budgeted labour rate * £42.50/ labour hour
Budgeted overhead burden* £149.825/ labour hour
Total cost per labour hour £192.325
• based on budgeted labour hours of 4,000
Labour machine no. of no of
Hours Hours set ups stores orders
Standard products (high volume) 2,500 3,500 80 160
Specialised products (low vol.) 1,500 3,000 200 300
4,000 6,500 280 460
Questions:
1. Analyse the problem and give advice as to the advantages of switching to
machine hours as an overhead recovery base.
2. Show how an activity based system would change the analysis of the costs
between the standard and specialist products.
3. Advise on the implementation of an ABC system. How can Davina’s fears be
lessened?
Notes on submitting assignment:
Please keep to a maximum of 2000 words in total for the non numeric aspects of the
assignment. 代写assignmentIf you use references please ensure to include these in a bibliography.
Part 1 will include the main calculations and will have 40% of marks allocated to it.
Part 2 will require some cost details in your arguments and will have 35% of marks.
Part 3 will be essentially discussion and will have 25% of marks.本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。